You are given the following information regarding prices for a sample of stocks.
PRICE
Stock Number of Shares T T+1
A 1,000,000 60 80
B 10,000,000 20 35
C 30,000,000 18 25
a. 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.
b. 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.
c. Briefly discuss the difference in the results for the two indexes.