Question

An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return? Stock Shares Outstanding Begin Price End Price A 4,500 $ 20 $ 25 B 7,000 $ 15 $ 12 C 3,000 $ 28 $ 35

Answer 1

14.29%

Step-by-step explanation:

Calculation for the price-weighted index return

Price-weighted index return = [($25 + $12 + $35)/3] - [($20 + $15 + $28)/3]/[($20 + $15+ $28)/3]

Price-weighted index return =[($72/3)-($63/3)]/($63/3)

Price-weighted index return =($24-$21)/$21

Price-weighted index return =$3/$21

Price-weighted index return =0.1429*100

Price-weighted index return =14.29%

Therefore the Price-weighted index return will be 14.29%