Question

You are given the following information concerning two stocks that make up an index.

Answer 1

Answer:

111

Explanation:

Given that,

Beginning index value = 100

Beginning value:

= Kirk, Inc. + Picard Co.

= (No. of shares outstanding × Price per share)

= (40,000 × $38) + (28,500 × $73)

= $1,520,000 + $2,080,500

= $3,600,500

Ending value:

= Kirk, Inc. + Picard Co.

= (No. of shares outstanding × Price per share)

= (40,000 × $42) + (28,500 × $81)

= $1,680,000 + $2,308,500

= $3,988,500

Index level at the end of the year:

= (Ending value ÷ Beginning value) × Beginning index value

= ($3,988,500 ÷ $3,600,500) × 100

= 1.11 × 100

= 111