Consider the following three stocks given in the following Table. Q represents number of shares and P represents price of stock. Day 0 Day 1 Day 2…
BBS Fundamentals of Investment · 2081 · Solved Question with Answer
Consider the following three stocks given in the following Table. Q represents number of shares and P represents price of stock.
| Day 0 | Day 1 | Day 2 | ||||
| Stocks | Q₀ | P₀ (Rs.) | Q₁ | P₁ (Rs.) | Q₂ | P₂ (Rs.) |
| Alpha | 200 | 80 | 200 | 90 | 200 | 110 |
| Beta | 300 | 100 | 300 | 110 | 600 | 65 |
| Gamma | 400 | 120 | 400 | 130 | 400 | 120 |
Stock Beta splits two-for-one on day 2.
a. Calculate price weighted indexes (PWI) for Day 0, Day 1 and Day 2.
b. What would be return for the day 1 based on PWI?
c. Calculate value weighted indexes (VWI) for Day 1 and Day 2, assume base index is 100.
d. What would be rate of returns for day 2 based on value weighted index?