An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Index Stock }&\text {Shares outstanding}&\text { Beginning Share}&\text { Ending Share }\
&&\text { Price }&\text { Price }\
\mathrm{D} & 1,000 & \$ 26 & \$ 32 \
\mathrm{E} & 4,000 & \$ 30 & \$ 28 \
\mathrm{~F} & 3,000 & \$ 19 & \$ 22
\end{array}$

A)9.33%
B)10.35%
C)11.54%
D)12.33%
E)13.00%

Question

An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Index Stock }&\text {Shares outstanding}&\text { Beginning Share}&\text { Ending Share }\
&&\text { Price }&\text { Price }\
\mathrm{D} & 1,000 & \$ 26 & \$ 32 \
\mathrm{E} & 4,000 & \$ 30 & \$ 28 \
\mathrm{~F} & 3,000 & \$ 19 & \$ 22
\end{array}$

A)9.33%
B)10.35%
C)11.54%
D)12.33%
E)13.00%

Quizplus · Accepted Answer

The price-weighted index return is calculated by taking the average of the ending prices, subtracting the average of the beginning prices, dividing by the average of the beginning prices, and then multiplying by 100 to get a percentage. The calculation is: [(32 + 28 + 22)/3 - (26 + 30 + 19)/3] / [(26 + 30 + 19)/3] * 100 = 9.33%.

An Index Consists of the Following Securities and Has an Index