Use a value line type of measure of the market

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Reference no: EM13808247

The market consists of the following stocks. Their prices and number of shares are as follows:

Stock Price Number of Shares Outstanding

A $10 100,000

B 20 10,000

C 30 200,000

D 40 50,000

a. The price of Stock C doubles to $60, what is the percentage increase in the market if a S&P 500 type of measure of the market is used?

b. Repeat question (a) but use a Value Line type of measure of the market (i.e., a geometric average) to determine the percentage increase.

c. Suppose the price of stock B doubled instead of stock C. How would the market have fared using the aggregate measures employed in (a) and (b)? Why are your answers different?

Reference no: EM13808247

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