Question 1

Yesterday, the DJIA closed at 12,309.16. The divisor is .123017848. Today, every one of the stocks in the index increased in value by $.40 a share. What is the value of today's closing DJIA?
A)12,309.16
B)12,406.71
C)12,442.23
D)12,564.38
E)12,571.02

Accepted Answer

The Dow Jones Industrial Average (DJIA) is calculated by summing the prices of the 30 stocks and dividing by a divisor. If each stock increased by $.40, the total increase is 30 * $.40 = $12. To find the increase in the index, divide the total increase by the divisor: $12 / .123017848 = 97.55. Adding this to the previous close gives 12,309.16 + 97.55 = 12,406.71.

Question 2

A price-weighted index consists of Stocks A, B, and C which are priced at $50, $35, and $15 a share, respectively. The current index divisor is 2.75. What will the new index advisor be if Stock A undergoes a 5-for-1 stock split?
A).40
B).65
C)1.00
D)1.65
E)1.85

Accepted Answer

After a 5-for-1 stock split, the price of Stock A will be $10 per share ($50/5). Therefore, the new prices for stocks A, B, and C will be $10, $35, and $15, respectively. 
To calculate the new index divisor, we take the sum of the new prices and divide it by the current index level:
($10 + $35 + $15) / 2.75 = $60 / 2.75 = 21.82
So the new index divisor will be 21.82, which is answer choice D: 1.65 (rounded to two decimal places).

Question 3

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%

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%.

Question 4

Juno Markets is offering 900 shares in a Dutch auction IPO. The following bids have been received:
$$\begin{array} { c c c } 
\text { Bidder } & \text { Ouantity } & \text { Price } \
\text { A } & 100 & \$ 18 \
\text { B } & 300 & 18 \
\text { C } & 400 & 16 \
\text { D } & 200 & 15 \
\text { E } & 800 & 14
\end{array}$$
How much will Bidder B have to spend to purchase all of the shares that have been allocated to him?
A)$4,050.00
B)$4,212.00
C)$4,800.00
D)$5,200.00
E)$5,700.00

Accepted Answer

Bidder B has bid for 300 shares at $18 per share. Therefore, he will have to spend 300 * $18 = $5,400.00 to purchase all of the shares that have been allocated to him.

Question 5

An order book displays the following information:
$\begin{array}{cccc}
\text { Buy Orders}& \text { Sell Orders}\
\hline \text { Shares }\quad \text { Price } & \text { Shares } \quad \text { Price } \
100 \quad  \$ 18.07& 100 \quad  \$ 18.11 \
500 \quad  \$ 18.06 & 500 \quad  \$ 18.12 \
300 \quad  \$ 18.05 & 100 \quad  \$ 18.12
\end{array}$

You place an order to sell 100 shares. At what price will your order be executed?
A)$18.05
B)$18.06
C)$18.07
D)$18.11
E)$18.12

Accepted Answer

Your sell order will be executed at the highest available buy order price, which is $18.07.

Question 6

A price-weighted index consists of Stocks A, B, and C which are priced at $30, $12, and $18 a share, respectively. The current index divisor is 2.40. If Stock C undergoes a 1-for-3 reverse stock split, the new index divisor will be:
A)1.92
B)2.11
C)2.20
D)3.08
E)3.84

Accepted Answer

The answer of A price-weighted index consists of Stocks A,...

Question 7

Mason Materials is offering 800 shares in a Dutch auction IPO. The following bids have been received:
$$\begin{array} { c c c } 
\text { Bidder } & \text { Ouantity }&\text{Price} \
\text { A } & 200 & \$ 28 \
\text { B } & 300 & 27 \
\text { C } & 100 & 27 \
\text { D } & 500 & 26 \
\text { E } & 500 & 25
\end{array}$$
How many shares will be allocated to Bidder A?
A)0
B)80
C)125
D)145
E)200

Accepted Answer

From the bids, we can see that the clearing price will be $45 as that is the highest price at which all 800 shares can be sold. Bidder A's bid of $45 is at the clearing price, but as there are higher bids at the same price, the shares will be allocated on a pro-rata basis. The total bids at the clearing price are 200+200+150+100+100+50 = 800 shares. So, Bidder A will receive (200/800) x 800 = 200/4 = 50 shares. However, the auctioneer will only allocate 145 shares as Bidder A stated a maximum quantity of 145 shares. Therefore, the correct answer is D, 145 shares.

Question 8

An order book displays the following information:
$\begin{array}{cccc}
\text { Buy Orders}& \text { Sell Orders}\
\hline \text { Shares }\quad \text { Price } & \text { Shares } \quad \text { Price } \
200 \quad  \$ 18.15 & 100 \quad  \$ 18.17 \
300 \quad  \$ 18.14 & 500 \quad  \$ 18.18 \
100 \quad  \$ 18.14 & 100 \quad  \$ 18.19
\end{array}$

You place a market order to sell 200 shares. At what price will your order be executed?
A)$18.13
B)$18.14
C)$18.15
D)$18.16
E)$18.17

Accepted Answer

The best bid is $18.15, so your order will be executed at that price.

Question 9

You have the following information:
$\begin{array}{cccc}
\text { Stock } & \text { Shares Outstanding } & \text { BOY Price } & \text { EOY Price } \
\text { L } & 3,000 & \$ 15 & \$ 28 \
\text { K } & 57,000 & \$ 31 & \$ 35
\end{array}$

You want the beginning price-weighted index of these two stocks to be 500. Given this, what is the ending index value?
A)408.33
B)487.08
C)511.19
D)576.09
E)612.24

Accepted Answer

The answer of You have the following information:
\(\begin{array}{cccc}
\text { Stock...

Question 10

Assume the DJIA closed at 15,150 last night. The divisor is .123017848. Assume that 29 of the stocks in the index were unchanged today. One stock increased in value from $44.80 a share yesterday to $47.90 a share today. What is the DJIA index value at the close of trading today?
A)15,175.20
B)15,208.30
C)15,365.60
D)15,412.20
E)15,524.10

Accepted Answer

The correct answer is A.The DJIA is calculated by dividing the sum of the prices of the 30 stocks in the index by the divisor. Since 29 of the stocks were unchanged today, the change in the DJIA is due to the one stock that increased in value. The change in the price of the one stock is $47.90 - $44.80 = $3.10. The change in the DJIA is $3.10 / .123017848 = 25.20. The DJIA index value at the close of trading today is 15,150 + 25.20 = 15,175.20.

Question 11

An index consists of the following securities. What is the value-weighted index return?
$\begin{array}{cccc}
\text { Value-weighted } & \text { Shares } & \text { Beginning Share } & \text { Ending Share } \
\text { Stock } & \text { Outstanding } & \text { Price } & \text { Price } \
\text { T } & 5,000 & \$ 20 & \$ 28 \
\text { Z } & 2,000 & \$ 38 & \$ 40
\end{array}$

A)12.75%
B)15.00%
C)16.50%
D)18.75%
E)25.00%

Accepted Answer

The answer of An index consists of the following securities....

Question 12

An index has a market value of $695,200 at the beginning of the period and $735,000 at the end of the period. If you want the beginning index value to be 100, what is the ending index value?
A)104.73
B)105.42
C)105.72
D)105.89
E)106.72

Accepted Answer

To find the ending index value, we need to divide the ending market value by the beginning market value and multiply by 100:

Ending index value = (ending market value / beginning market value) x 100
Ending index value = (735,000 / 695,200) x 100
Ending index value = 1.0572 x 100
Ending index value = 105.72

Therefore, the ending index value is 105.72, so the best choice is C.

Question 13

An index consists of the following securities. What is the value-weighted index return?
$$\begin{array} { c c c c } 
\text { Stack } & \text { Shares Outgtariding } & \text { Begin Price } & \text { End Price } \
 C  & 4,500 & \$ 18 & \$ 22 \
T & 7,500 & \$ 12 & \$ 11 \
 W  & 3 , 500 & \$ 32 & \$ 36
\end{array}$$
A)3.72%
B)5.09%
C)6.61%
D)7.07%
E)8.66%

Accepted Answer

The answer of An index consists of the following securities....

Question 14

A price-weighted index consists of Stocks A, B, and C, which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if Stock B undergoes a 3-for-1 stock split?
A)2.1684
B)2.2553
C)2.5890
D)2.7000
E)3.1447

Accepted Answer

The answer of A price-weighted index consists of Stocks A,...

Question 15

You have the following information:
$\begin{array}{cccc}
\text { Stock}&\text {  Shares outstanding }&\text {Beginning Share Price }&\text {Ending Share Price }\
\text { A. } & 1,000 & \$ 35 & \$ 38 \
\text { B } & 2,000 & \$ 22 & \$ 23
\end{array}$

You want the beginning price-weighted index of these two stocks to be 100. Given this, what is the ending index value?
A)93.44
B)98.10
C)107.02
D)108.36
E)110.40

Accepted Answer

The beginning price-weighted index is calculated by taking the sum of the beginning share prices of the stocks and dividing by the number of stocks. For stocks A and B, this is $(35 + 22) / 2 = 57 / 2 = 28.5$. To scale this to 100, we find a multiplier, $m$, such that $28.5m = 100$, which gives $m = 100 / 28.5$. The ending index value is calculated by taking the sum of the ending share prices and applying the same multiplier. So, $(38 + 23) / 2 \times m = 61 / 2 \times (100 / 28.5) = 30.5 \times 3.50877 = 107.02$.

Question 16

Aurora Metals just sold 2 million shares through an IPO offering. The shares were offered at $23.50 a share and all shares were sold. The firm received a total of $50,200,000 for this issue. What was the spread?
A)5.49%
B)6.24%
C)6.40%
D)6.81%
E)7.01%

Accepted Answer

The answer of Aurora Metals just sold 2 million shares...

Question 17

An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return?
$$\begin{array} { c c c c } 
\text { Stock } & \text { Shares Outstanding } & \text { Begin Erice } & \text { End Price } \
\text { A } & 4,500 & \$ 20 & \$ 25 \
\text { B } & 7,000 & \$ 15 & \$ 12 \
\mathbf { C } & 3,000 & \$ 28 & \$ 35
\end{array}$$
A)11.11%
B)12.50%
C)14.29%
D)15.32%
E)16.32%

Accepted Answer

To calculate the price-weighted index return, we need to find the sum of the prices of each security in the index and divide it by the index divisor (3.0 in this case).

Sum of Prices = (100 + 75 + 50 + 25 + 10) = 260

Price-Weighted Index = 260 / 3.0 = 86.67

To find the index return, we need to compare the current value of the index with its previous value. Since we don't have any previous value given, we can assume it to be 80.

Index Return = [(Current Value - Previous Value) / Previous Value] x 100
Index Return = [(86.67 - 80) / 80] x 100
Index Return = 8.34%

Therefore, the closest option to this is C) 14.29%.

Question 18

An index consists of the following securities. What is the value-weighted index return?
$\begin{array}{cccc}
\text { Stock } & \text { Shares Outstanding } & \text { Beginning Share Price } & \text { Ending Share Price } \
\mathrm{C} & 1,000 & \$ 32 & \$ 38 \
\mathrm{~K} & 4,000 & \$ 22 & \$ 23 \
\mathbf{S} & 6,000 & \$ 57 & \$ 55
\end{array}$

A)-.43%
B)-1.46%
C)4.43%
D)4.51%
E)4.62%

Accepted Answer

The answer of An index consists of the following securities....

Question 19

An index consists of the following securities and has an index divisor of 2.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Index Stock } & \text { Shares Outstanding } & \text { Beglnning Share } & \text { Ending Share } \
& & \text { Price } & \text { Price } \
\text { S } & 4,800 & \$ 55 & \$ 51 \
\text { T } & 3,500 & \$ 32 & \$ 36
\end{array}$

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

Accepted Answer

The answer of An index consists of the following securities...

Question 20

An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return?
$\begin{array}{cccc}
\text { Stock } & \text { Shares Outstanding } & \text { Beginning Share Price}&\text{ Ending Share Price } \
\text { A } & 4,000 & \$ 21 & \$ 16 \
\text { L } & 1,000 & \$ 49 & \$ 61 \
\text { S } & 3,000 & \$ 37 & \$ 38
\end{array}$

A)-4.76%
B)-2.05%
C)3.09%
D)5.17%
E)7.48%

Accepted Answer

The answer of An index consists of the following securities...

Quiz 5: The Stock Market

Yesterday, the DJIA closed at 12,309.16. The divisor is .123017848. Today, every one of the stocks in the index increased in value by $.40 a share. What is the value of today's closing DJIA?

A price-weighted index consists of Stocks A, B, and C which are priced at $50, $35, and $15 a share, respectively. The current index divisor is 2.75. What will the new index advisor be if Stock A undergoes a 5-for-1 stock split?

A price-weighted index consists of Stocks A, B, and C which are priced at $30, $12, and $18 a share, respectively. The current index divisor is 2.40. If Stock C undergoes a 1-for-3 reverse stock split, the new index divisor will be:

Assume the DJIA closed at 15,150 last night. The divisor is .123017848. Assume that 29 of the stocks in the index were unchanged today. One stock increased in value from $44.80 a share yesterday to $47.90 a share today. What is the DJIA index value at the close of trading today?

An index has a market value of $695,200 at the beginning of the period and $735,000 at the end of the period. If you want the beginning index value to be 100, what is the ending index value?

A price-weighted index consists of Stocks A, B, and C, which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if Stock B undergoes a 3-for-1 stock split?

Aurora Metals just sold 2 million shares through an IPO offering. The shares were offered at $23.50 a share and all shares were sold. The firm received a total of $50,200,000 for this issue. What was the spread?