An index consists of the following securities and has an index divisor of 2.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Stock } & \text { Shares Outstanding } & \text { Begin Price } & \text { End Price } \
\mathrm{X} & 4,200 & \$ 35 & \$ 36 \
\mathrm{Y} & 3,800 & \$ 30 & \$ 29
\end{array}$

A)-1.69%
B)-.78%
C)0
D).92%
E)1.43%

Question

An index consists of the following securities and has an index divisor of 2.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Stock } & \text { Shares Outstanding } & \text { Begin Price } & \text { End Price } \
\mathrm{X} & 4,200 & \$ 35 & \$ 36 \
\mathrm{Y} & 3,800 & \$ 30 & \$ 29
\end{array}$

A)-1.69%
B)-.78%
C)0
D).92%
E)1.43%

Quizplus · Accepted Answer

Since the index divisor is 2.0, we just need to add up the prices of the securities and divide by 2 to get the index level. Since there is no information given about the previous index level, we cannot calculate the index return. Therefore, the index return is 0%.

An Index Consists of the Following Securities and Has an Index