Calculate weights in market cap weighted stock market index

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-Suppose you have 600 monthly observations of stock market returns. The mean value is 0.55% and the standard deviation is 6.25. What would be the lower boundary under normality so that only 5% of your observations are less than this calculated value? What conclusion would you draw if 30 of those 600 observations fall below that lower boundary?

-Carefully explain how you would calculate the weights in a market cap weighted stock market index, the weights in a price weighted index and the weights in an equally weighted index. Why is the market cap weighted index widely used when providing investable products following a stock market index?

Reference no: EM133003223

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