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11 May, 17:14

A benchmark index has three stocks priced at $37, $60, and $70. The number of outstanding shares for each is 420,000 shares, 545,000 shares, and 693,000 shares, respectively. If the market value weighted index was 880 yesterday and the prices changed to $37, $56, and $74, what is the new index value?

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  1. 11 May, 18:14
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    885.38

    Explanation:

    Market value yesterday = 37 x 420000 + 60 x 545000 + 70 x 693000 =

    15540000 + 32700000 + 48510000=

    96,750,000

    Market value today = 37 x 420000 + 56 x 545000 + 74 x 693000 =

    15540000 + 30520000 + 51282000=

    97,342,000

    Market value today / Market value yesterday = Index today / Index yesterday

    Index today = Market value today / Market value yesterday x Index yesterday = 97,342 / 96,750 x 880 = 885.38

    New Index value = 885.38
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