Assume a price-weighted index of 50 stocks closes at 5463.12. The divisor is 2.463215. The next day the prices for 49 of the stocks remain the same and one stock increases by $5.00. What is the new index level?

Question

Quizplus · Accepted Answer

The new index level is calculated by adding the $5 increase to the total sum of the stock prices and then dividing by the divisor. The initial sum of the stock prices is 5463.12 * 2.463215 = 13456.25. Adding $5 gives 13461.25. Dividing by the divisor, 13461.25 / 2.463215 = 5465.15.

Assume a Price-Weighted Index of 50 Stocks Closes at 5463