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  • Stock Market Indices Price Weighted Index 2 Value Weighted Index

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    ilyas
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    1) There are two main types of stock market indices - price weighted indices and market capitalization weighted indices. Price weighted indices calculate the index value as the sum of the current stock prices divided by the number of stocks in the index, while market cap weighted indices calculate the index value based on the total market value of the index stocks relative to a base year. 2) A value weighted index calculates the index value based on the overall market capitalization of the constituent stocks, weighted according to each stock's relative market capitalization. It adjusts for stock splits, mergers and new additions to better represent the total market value of the index stocks. 3) The example calculations demonstrate how stock splits, reverse splits and

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    1) There are two main types of stock market indices - price weighted indices and market capitalization weighted indices. Price weighted indices calculate the index value as the sum of the current stock prices divided by the number of stocks in the index, while market cap weighted indices calculate the index value based on the total market value of the index stocks relative to a base year. 2) A value weighted index calculates the index value based on the overall market capitalization of the constituent stocks, weighted according to each stock's relative market capitalization. It adjusts for stock splits, mergers and new additions to better represent the total market value of the index stocks. 3) The example calculations demonstrate how stock splits, reverse splits and

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    12 views13 pages

    Stock Market Indices Price Weighted Index 2 Value Weighted Index

    Uploaded by

    ilyas
    1) There are two main types of stock market indices - price weighted indices and market capitalization weighted indices. Price weighted indices calculate the index value as the sum of the current stock prices divided by the number of stocks in the index, while market cap weighted indices calculate the index value based on the total market value of the index stocks relative to a base year. 2) A value weighted index calculates the index value based on the overall market capitalization of the constituent stocks, weighted according to each stock's relative market capitalization. It adjusts for stock splits, mergers and new additions to better represent the total market value of the index stocks. 3) The example calculations demonstrate how stock splits, reverse splits and

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 13

    Stock Market Indices

    Price Weighted Index


    1
    Value Weighted Index
    2

    Market Capitlaization

    Value Weighted Index


    Sum of stocks price/number of stocks in index adjusted for splits

    current total marekt value of index stocks/base year total market value of index stocks *base year index value

    MPS * Number of Shares

    (Overall Market Cap/Base)*index


    Question 1

    Compaines Day 1 Day2 Day3


    A 12 10 14
    B 23 22 46
    C 52 55 52

    Price -Index Value 29 29 29

    New Divisor New Divisor


    3.8620689655 2.93103448276

    Question 2

    Compaines Day 1 Day2 Day3


    A 20 25 30
    B 40 45 52*
    C 10 15 18
    D 60 55 65

    Price-Index Value 32.5 35 41.25

    New Divisor
    3.63636363636

    Question 3
    Compaines Day 1 Day2 Day3
    A 30 36* 20
    B 10 15 20*
    C 18 24 28

    Price-Index Value 19.33333333 25 25


    New Divisor New Divisor
    2.72 4.4

    Question 5

    Compaines Day 1 Day2 Day3


    A 70 76 82
    B 16* 50 56
    C 42 45 62*
    D 18 22 28

    Price-Index Value 36.5 36.5 43.1191709845

    New Divisor New Divisor


    5.287671233 4.89341504446
    Day4 Day5
    13 12
    47 45
    25 26

    29 28.31764706 stock B has reverse split (one for two) on day 3

    Stock C has stock split (two for one) on day 4

    Day4 Day5
    26 38
    27 32
    37* 76
    60 72
    stock B has stock split (two for one) on day 4

    41.25 41.25 Stock C has reverse stock split (one for two) on day 5

    New Divisor
    5.2848484848
    Day4 Day5
    26 32
    62 70
    22 29

    25 29.77272727 stock A has stock split (two for one) on day 3

    Stock B has reverse stock split (one for three) on day 4

    Day4 Day5
    86 74
    65 57
    36 41
    24 32
    stock B has reverse stock split (one for three) on day 2
    43.119170984 41.68867716
    Stock C has stock split (two for one) on day 4
    r two) on day 3

    one) on day 4

    one) on day 4

    one for two) on day 5


    Question No. 1

    A # of Shares
    Day 1 12 500
    Day2 10 500
    Day3 14 500
    Day4 13 500
    Day5 12 500

    Overall Market Cap


    Day 1 27050
    Day2 26450
    Day3 28050
    Day4 27225
    Day5 26875

    Question No. 2

    A # of Shares
    Day 1 15 100
    Day2 18 100
    Day3 22 100
    Day4 25 100
    Day5 32 100

    Days Overall Market Cap Value-weighted Index


    Day 1 21500 1000
    Day2 25300 1176.74418604651
    Day3 29400 1367.44186046512
    Day4 31700 1474.41860465116
    Day5 35600 1655.81395348837

    Question No. 3
    A # of Shares
    Day 1 20 500
    Day2 25 500
    Day3 18 500
    Day4 38 250
    Day5 42 250

    Overall Mrk Cap


    D1   21600
    D2    25700
    D3     23200
    D4    24100
    D5     26300
    Market Cap A B # of Shares Market Cap B C
    6000 23 350 8050 52
    5000 22 350 7700 55
    7000 46 175 8050 52
    6500 47 175 8225 25
    6000 45 175 7875 26

    Value Weighted Index stock B has reverse stock split (one for two) on day 3
    100
    97.7818853974122 stock C has stock split (two for one) on day 4
    103.69685767098
    100.646950092421 Use benchmark of 100
    99.3530499075786

    Market Cap A B # of Shares Market Cap B C


    1500 20 400 8000 40
    1800 25 400 10000 45
    2200 52 200 10400 56
    2500 56 200 11200 60
    3200 60 200 12000 34

    stock B has reverse stock split (one for two) on day 3

    stock C has stock split (two for one) on day 5

    Use benchmark of 1000


    VWI (Overall Market Capitalization/Base)*1000
    Market Cap A B # of Shares Market Cap B C
    10000 32 200 6400 52
    12500 38 200 7600 56
    9000 42 200 8400 58
    9500 24 400 9600 50
    10500 28 400 11200 46

    stock A has reverse stock split (one

    stock B has stock split (two for one

    Use benchmark of 100

    Value-weighted index
    100
    118.981481481481
    107.407407407407
    111.574074074074
    121.759259259259
    # of Shares Market Cap C Overall Market Cap
    250 13000 27050
    250 13750 26450
    250 13000 28050
    500 12500 27225
    500 13000 26875

    ock split (one for two) on day 3

    split (two for one) on day 4

    nchmark of 100

    # of Shares Market Cap C Overall Market Cap


    300 12000 21500
    300 13500 25300
    300 16800 29400
    300 18000 31700
    600 20400 35600

    wo) on day 3
    # of Shares Market Cap C Overall Market Cap
    100 5200 21600
    100 5600 25700
    100 5800 23200
    100 5000 24100
    100 4600 26300

    ock A has reverse stock split (one for two) on day 4

    ock B has stock split (two for one) on day 3

    se benchmark of 100

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