Consider a value-weighted market index that includes the two companies shown in the table.What is the percentage change in the index from Day 1 to Day 2?

A) 4.00%
B) 4.25%
C) 4.50%
D) 4.75%
E) 5.00%

Question

Consider a value-weighted market index that includes the two companies shown in the table.What is the percentage change in the index from Day 1 to Day 2?

A) 4.00% 
B) 4.25% 
C) 4.50% 
D) 4.75% 
E) 5.00%

Quizplus · Accepted Answer

Value of Company 1 on Day 1 = $7 × 400 = $2,800
Value of Company 2 on Day 1 = $10 × 1,500 = $15,000
Total Value on Day 1 = $2,800 + $15,000 = $17,800
Value of Company 1 on Day 2 = $7.24 × 400 = $2,896
Value of Company 2 on Day 2 = $10.53 × 1,500 = $15,795
Total Value on Day 2 = $2,896 + $15,795 = $18,691
The percentage change in the index = 11ea7fdb_fc06_f124_a768_2b9665a7f1f3_TB2902_11 11ea7fdb_fc06_f125_a768_ab1b48815f7b_TB2902_11 = 0.0501 or about 5.00%

Consider a Value-Weighted Market Index That Includes the Two Companies