We must adjust the divisor of the index to leave the index, Financial Management

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We must adjust the divisor of the index to leave the index

A price weighted index is composed of 2 stocks, A and B, priced at $60 and $200 per share, respectively, at the close of market today. So our initial value of the index is (60+200)/2 = 130.

Tomorrow stock B will split 4:1. We must adjust the divisor of the index to leave the index unchanged due to the stock split. What will be the new divisor?

Enter answer accurate to 3 decimal places.

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Financial Management: We must adjust the divisor of the index to leave the index

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Financial Management: We must adjust the divisor of the index to leave the index

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