Reference no: EM133120102
1. How does a normal stock split (for example, a 3-for-1 stock split) impact a value-weighted stock market index?
a. It is automatically adjusted for because in a value-weighted index the stock price is multiplied by the number of stock shares outstanding.
b. The divisor of the index must be adjusted to counteract the effect of the stock split. c. Both
c. Both the numerator and denominator are multiplied by the split adjustor.
d. Only the numerator is multiplied by the split adjustor.
2. How does a normal stock split (for example, a 3-for-1 stock split) impact a price-weighted stock market index?
a. It is automatically adjusted for because in a price-weighted index the stock price is multiplied by the number of stock shares outstanding.
b. The divisor of the index must be adjusted to counteract the effect of the stock split.
c. Both the numerator and denominator are multiplied by the split adjustor.
d. Only the numerator is multiplied by the split adjustor.
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