Question

Today, Stock A is worth $20 and has 1,000 shares outstanding. Stock B costs $30 and has 500 shares outstanding. Stock C is priced at $50 per share and has 1,200 shares outstanding. If, tomorrow, Stock A is priced at $22, Stock B at $35, and Stock C is worth $48, what would the value-weighted index amount equal? (The index has a base period value of 100.)

Answer 1

Answer:

$102.21

Explanation:

The computation of value-weighted index is shown below:-

Today value

Stock A = $20 × 1000

= $20,000

Stock B = $30 × 500

= $15,000

Stock C = $50 × 1200

= $60,000

Total market value = $60,000 + $15,000 + $20,000

= $95,000

Tomorrow

Stock A = $22 × 1,000

= $22,000

Stock B = $35 × 500

= $17,500

Stock C = $48 × 1,200

= $57,600

Total market value = $57600 + $17,500 + $22,000

= $97,100

Value weighted return = Tomorrow Total market value ÷ Today Total market value × 100

= $97100 ÷ $95000 × 100

= $102.21