Problem
These four common stocks issued no additional shares and had no stock dividends or splits. Ignore cash dividend payments when computing the price index:
|
Stock
|
Total shares outstanding on both dates
|
Base price market value (July 16, 2000)
|
More recent period market price (July 16,2009)
|
|
Nepal investment bank
|
60,000
|
RS 100
|
Rs 1600
|
|
Standard & Chartered Bank Nepal
|
50,000
|
100
|
400
|
|
Harishiddi Bricks and tiles
|
100,000
|
10
|
3
|
|
Butwal Spinning ltd
|
50,000
|
100
|
40
|
1) Calculate and interpret the value of the index as on July 16 ,2009, assuming that the new four-stock index is (a) Value-weighted, (b) Price-weighted, and (iii) equally weighted.
2) While calculating the indexes we assumed the four stocks (a) issued no additional shares, (b) had no stock dividends, (c) had no stock splits, and (d) ignored cash dividends. State specifically how the relaxation of these assumptions influences/ do not influence the indexes you calculated.