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Three stocks have share prices of $21, $75, and $45 with total market values of $460...

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Finance

Three stocks have share prices of $21, $75, and $45 with totalmarket values of $460 million, $410 million, and $210 million,respectively. If you were to construct a price-weighted index ofthe three stocks, what would be the index value?

rev: 02_11_2013_QC_26234

60

47

360

75

Answer & Explanation Solved by verified expert
3.7 Ratings (521 Votes)

Price weighted index is calculated using the below formula:

Price weighted index= Sum of prices/ Number of stocks

                                         = $21 + $75 + $45/ 3

                                         = $141/3

                                         = $47.

Hence, the answer is option b.

In case of any query, kindly comment on the solution.
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Transcribed Image Text

Three stocks have share prices of $21, $75, and $45 with totalmarket values of $460 million, $410 million, and $210 million,respectively. If you were to construct a price-weighted index ofthe three stocks, what would be the index value?rev: 02_11_2013_QC_26234604736075

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