Suppose there are only two stocks in the market and the following information is given:
Shares Outstanding Beginning of Year Price End of year Price
Ally Co. 100 million $60 $66
McBeal, Inc. 400 million 112 100
1. Construct price and value weighted indexes and calculate the percentage changes in each.
2. In the previous problem, suppose McBeal splits 3-for-1. bases on beginning information, what is the new divisor?