What are the percentage changes

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You have decided to create a price weighted and value weighted index using the two largest stocks in a five stock market. These two stocks make up 65% of the value of the market. The number of shares and prices for all five stocks over the last three years are given below.

Stock No. of Shares Year 1 Year 2 Year 3

A 2,000 $40 $48 $49

B 1,500 $20 $22 $25

C 800 $30 $28 $33

D 400 $17 $19 $23

E 300 $25 $27 $26

1.1. Using just stocks A and B, what is the price-weighted index for the three years? What are the percentage changes?

1.2. Using just stocks A and B and starting your index at 10, what is the value weighted index for the three years? What are the percentage changes.

1.3. Now find the percentage changes for price and value weighted indexes using all five stocks.

1.4. How well did your two stock index indicate the actual performance of the entire market?

Reference no: EM132629265

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