Question

2). Consider the following information for three stocks. Time-0 Time= 1 Price per share $90 $50 $100 Total shares Price er share $108 $90 $55 Total shares outstanding 100 100* 400* Stock outstandingp 100 200 200 "Number of shares outstanding for B and C changed due to reverse and regular stock splits, respectively a) Calculate the value-weighted, equal-weighted, and price weighted index weights of stocks A, B and C at time 0. b) Calculate the holding period return on stocks A, B, and C from time 0 to time 1. c) Calculate the value-weighted, equal-weighted, and price-weighted index returns on a portfolio of stocks A, B, and C in the first quarter of 2004?

Answer 1

for price weighted weights of the stock we use the formula price of stock / sum of price of stock A,B and C

value weighted weights for stock = total value of stock/ sum of total values of stocks A,B,C

equal weights for each stock = 1/3