Investment Analysis Questions

  1. You are given the following information regarding prices for a sample of stocks.
PRICE
StockNumber of SharesTT + 1
A  3,900,000$74$90
B14,000,000  28  43
C28,000,000  18  29
  1. Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • You are given the following information regarding prices for a sample of stocks.
PRICE
StockNumber of SharesTT + 1
A  3,300,000$66$78
B12,000,000  26  38
C26,000,000  21  34
  1. Construct an equal-weighted index by assuming $1,000 is invested in each stock. What is the percentage change in wealth for this portfolio? Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • Compute the percentage of price change for each of the stocks. Do not round intermediate calculations. Round your answers to two decimal places.

Stock A:   %

Stock B:   %

Stock C:   %

Compute the arithmetic mean of these percentage changes. Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • Compute the geometric mean of the percentage changes in Part b. Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • Calculate a Dow Jones Industrial Average for days 1 through 5. Do not round intermediate calculations. Round your answers to three decimal places.

PRICE
SHARES   Company A B C A B C Day 1 $15 $23 $53 500 400  210  Day 2   10   21   55 500 400  210  Day 3   15   46   50 500 200a 210  Day 4   14   47   23 500 200  420b Day 5   10   46   25 500 200  420  aSplit at close of day 2.
bSplit at close of day 3. Day 1:  Day 2:  Day 3:  Day 4:  Day 5:                Calculate a Standard& Poor’s Index for days 1 through 5 using a beginning index value of 10. Do not round intermediate calculations. Round your answers to three decimal places.
PRICESHARES 
CompanyABCABC 
Day 1$14$23$53550370 270  
Day 2  10  25  56550370 270  
Day 3  14  46  58550185a270  
Day 4  13  48  31550185 540b 
Day 5  12  45  29550185 540  
aSplit at close of day 2.
bSplit at close of day 3.
 

Day 1: 

Day 2: 

Day 3: 

Day 4: 

Day 5: 

  • Consider the following stock price and shares outstanding information.
DECEMBER 31, Year 1DECEMBER 31, Year 2

Price
Shares
Outstanding

Price
Shares
Outstanding
Stock K$21105,000,000$29105,000,000 
Stock M702,000,000484,000,000a
Stock R4320,000,0004820,000,000 
aStock split two-for-one during the year.
 
  1. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.

          PWIYear 1

          PWIYear 2

          VWIYear 1

          VWIYear 2

  • Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places.

Percentage change in PWI:   %

Percentage change in VWI:   %

  • Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.

  %

  • Given the monthly returns that follow, find the R2, alpha, and beta of the portfolio. Compute the average return differential with and without sign. Do not round intermediate calculations. Round your answers to two decimal places.
MonthPortfolio ReturnS&P 500 Return
January5.5%5.8%
February-2.5-3.2
March-1.7-1.3
April2.92.0
May0.70.4
June-0.5-0.1
July0.10.3
August1.11.3
September-0.8-0.6
October-3.0-3.4
November2.31.6
December0.60.4

R2:   

Alpha:   %

Beta:   

Average return difference (with signs):   %

Average return difference (without signs)   %

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