Price-weighted index for stocks


Problem:

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period.

  • P0 Q0 P1 Q1 P2 Q2
  • A 90 100 95 100 95 100
  • B 50 200 45 200 45 200
  • C 100 200 110 200 55 400

Required:

Question 1: Calculate a Price-Weighted Index for stocks A, B, and C for all time periods

Question 2: Calculate the Returns for Each Period for Part A

Question 3: What is the denominator value of the Equal-Weighted Index for all time periods?

Question 4: Calculate a Value-Weighted Index for stocks A, B, and C for all time periods

Question 5: Calculate the Returns for Each Period for Part D

Note: Please describe comprehensively and provide step by step solution.

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Finance Basics: Price-weighted index for stocks
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