Question: You are given the following information regarding prices for a sample of stocks:
| |
|
|
Price |
|
| Stock |
Number of Shares |
|
T |
T + 1 |
| a |
1,000,000 |
|
60 |
80 |
| b |
10,000,000 |
|
20 |
35 |
| c |
30,000,000 |
|
18 |
25 |
a) Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1
b) Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.
c) Briefly discuss the difference in the results for the two indexes.