Tutorial 2: Chapter 2

1) The table below is based on the power point slides for Chapter 2, calculate
the Equal-Weighted Series (as in new Chapter 2 slide 33) with stock split in
Stock B, where 80 unit of share has been divided into 160 shares, and the
price of share B drop from $50 to $25. Use the capital approach, assuming
you have $300 investment capital.

Stock

PriceB

QuantityB

P1

Q1

$10

40

$15

40

50

80

25

160

140

50

150

50

2) The table below is based on the power point slides for Chapter 2 (new Chapter
2 slide 34), compare whether changes in prices of different size of stock resulted
in different changes in index. Use the equal weighted method assuming you have
$100 investment capital.
(i)
(ii)

changes in small stock A from $10 to $12 (Case 1)

changes in medium stock C from $50 to $60 (Case 2)
Initial

Case 1

Case 2

Stock

PB

QB

P1

Q1

P1

Q1

$10

40

$12

40

$10

40

100

80

100

80

100

80

50

200

50

200

60

200

3) Based on the same table as in question 2, what happen if Stock B, the biggest
firm increase 20% from $100 to $120? Is the result the same if the index is
constructed using the value weighted method?