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Question
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?
Answer
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