Reference no: EM13961744

Homework #1 (Computation of Dow Jones Industrial Average)

1. Collect the names and closing share prices of the 30 companies in the DJIA from a recent WSJ (www.wsj.com) or any other source. Compute the value of the DJIA using the divisor reported in a recent WSJ (Section - Market Digest). State the date and time you picked for the data. Note down the value of the DJIA when you copied the stock price data.

2. Compare the value you computed with the value of the DJIA which you copied from the WSJ (or any other source) at the time and day you used for the homework. Are the two values same? Attach copy of the DJIA value for the date and time you picked from WSJ or other publication so we I can verify. Copy and paste or a snap shot of the page would suffice.

3. What is the weight given to each company price in the computation of the DJIA value? Are they different?

4. Assume that the stock with the highest price has a four-for-one split. Compute the value of the DJIA after the split. Is this value different from the value before the split?

5. Determine the change in the value of the divisor as a result of the stock split which was necessary to keep the value of the DJIA same before and after the stock split.

NOTES:
1. Each student works with a different set of numbers (different time and/or day chosen). Clearly indicate the date and time you picked the data for. Stock prices change by the minute; so, no two students should use the same set of numbers.
2. Multiple submissions of the same homework would be considered cheating and be penalized.
3. Must use MS Excel for computations and text. Show all computations using Excel functions. Computations should be revealed once cursor is placed on the cell showing the result.