Calculate the market? index

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Reference no: EM131835113

Deepa Chungi wishes to develop an? average, or? index, that can be used to measure the general behavior of stock prices over time. She has decided to include 6 closely? followed, high-quality stocks in the average or index. She plans to use August? 15, 1987, her? birthday, as the base and is interested in measuring the value of the average or index on August? 15, 2013, and August? 15, 2016. She has found the closing prices for each of the 6? stocks, A through? F, at each of the 3 dates and has calculated a divisor that can be used to adjust for any stock? splits, company? changes, and so on that have occurred since the base? year, which has a divisor equal to 1.00. a. Using the data given in the? table,

Closing Stock Price

Stock August 15, 2013 August 15, 2010 August 15, 1984

A 45.61 40.14 49.75

B 36.81 35.87 9.36

C 19.07 22.71 6.69

D 59.66 61.16 25.47

E 81.55 70.59 45.28

F 31.49 30.61 32.51

Divisor 0.70 0.72 1.00

b. Using the data given in the table and assuming a base index value of 10 on August? 15, 1987, calculate the market? index, using the same methodology used to calculate the? S&P indexes, at each of the 3 dates.

c. Use your findings in parts a and b to describe the general market conditionlong dash—bull or bearlong dash—that existed between August? 15, 2013, and August? 15, 2016. d. Calculate the percentage changes in the average and index values between August? 15, 2013, and August? 15, 2016. Why do they? differ?

Reference no: EM131835113

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