USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
*2:1 Split on Stock Z after Close on Jan. 13, 2005
**3:1 Split on Stock X after Close on Jan. 15, 2005
The base date for index calculations is January 13, 2005
-Refer to Exhibit 4.2. Calculate a value weighted index for Jan. 13th if the initial index value is 100.
A) 111.54
B) 100
C) 102.31
D) 123.07
E) 143.25

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  *2:1 Split on Stock Z after Close on Jan. 13, 2005
**3:1 Split on Stock X after Close on Jan. 15, 2005
The base date for index calculations is January 13, 2005
-Refer to Exhibit 4.2. Calculate a value weighted index for Jan. 13th if the initial index value is 100.
A) 111.54 
B) 100 
C) 102.31 
D) 123.07 
E) 143.25

Quizplus · Accepted Answer

Since it is a value-weighted index, the initial value is based on the market capitalization of the stocks. Since we are given no information about the market capitalization of the stocks, we cannot calculate the index value. Thus, the initial index value remains at 100.