If the index is equally weighted you have 1000 in the index


An index consists of the following securities

Stock Shares Outstanding Yesterday's Price Today's Price
A 1,000 $32 $38
B 4,000 $22 $23
C 6,000 $57 $55

* Suppose the index is price-weighted. Current index divisor is 2.7. If after today, Stock B experience a 3-for-1 split. What is the new divisor?
* If the index is value-weighted, what is the index level? Use yesterday as a base. Assume yesterday's index level is 1,000.
* If the index is equally weighted. You have $1000 in the index yesterday. How should you rebalance your positions today?

 

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Finance Basics: If the index is equally weighted you have 1000 in the index
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