Consider the following stock price and shares outstanding information: Stock December 31, 2018 December 31, 2019 Price Number of shares outstanding…
BBS Fundamentals of Investment · 2078 · Solved Question with Answer
Consider the following stock price and shares outstanding information:
| Stock | December 31, 2018 | December 31, 2019 | ||
| Price | Number of shares outstanding | Price |
No. of shares outstanding (million)
|
|
| A | Rs. 200 | 1,000,000 | Rs. 250 | 1,000,000 |
| B | 800 | 200,000 | 420 | 4,000,000 |
| C | 400 | 250,000 | 450 | 250,000 |
Stock B splits two for one at the end of 2018.
a. Compute the price-weighted index for two periods and the rate of return on price weighted index in 2019.
b. Compute value weighted index for two periods and the rate of return on value weighted index in 2019.
c. Why are they different?