Investment Analysis Questions

1. You are given the following information regarding prices for a sample of stocks.

		PRICE
Stock	Number of Shares	T		T + 1
A	3,900,000		$74		$90
B	14,000,000		28		43
C	28,000,000		18		29

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. Do not round intermediate calculations. Round your answer to two decimal places.

  %

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. Do not round intermediate calculations. Round your answer to two decimal places.

  %

2. You are given the following information regarding prices for a sample of stocks.

		PRICE
Stock	Number of Shares	T		T + 1
A	3,300,000		$66		$78
B	12,000,000		26		38
C	26,000,000		21		34

a. Construct an equal-weighted index by assuming $1,000 is invested in each stock. What is the percentage change in wealth for this portfolio? Do not round intermediate calculations. Round your answer to two decimal places.

  %

b. Compute the percentage of price change for each of the stocks. Do not round intermediate calculations. Round your answers to two decimal places.

Stock A:   %

Stock B:   %

Stock C:   %

Compute the arithmetic mean of these percentage changes. Do not round intermediate calculations. Round your answer to two decimal places.

  %

c. Compute the geometric mean of the percentage changes in Part b. Do not round intermediate calculations. Round your answer to two decimal places.

  %

3. Calculate a Dow Jones Industrial Average for days 1 through 5. Do not round intermediate calculations. Round your answers to three decimal places.

PRICE SHARES Company A B C A B C Day 1 $15 $23 $53 500 400  210  Day 2   10   21   55 500 400  210  Day 3   15   46   50 500 200a 210  Day 4   14   47   23 500 200  420b Day 5   10   46   25 500 200  420  aSplit at close of day 2. bSplit at close of day 3. Day 1:  Day 2:  Day 3:  Day 4:  Day 5:  4. Calculate a Standard& Poor's Index for days 1 through 5 using a beginning index value of 10. Do not round intermediate calculations. Round your answers to three decimal places.
PRICE		SHARES
Company	A	B	C		A	B	C
Day 1	$14		$23		$53		550		370		270
Day 2	10		25		56		550		370		270
Day 3	14		46		58		550		185a		270
Day 4	13		48		31		550		185		540b
Day 5	12		45		29		550		185		540
aSplit at close of day 2. bSplit at close of day 3.

Day 1: 

Day 2: 

Day 3: 

Day 4: 

Day 5: 

5. Consider the following stock price and shares outstanding information.

	DECEMBER 31, Year 1		DECEMBER 31, Year 2
	Price	Shares Outstanding		Price	Shares Outstanding
Stock K	$21		105,000,000		$29		105,000,000
Stock M	70		2,000,000		48		4,000,000a
Stock R	43		20,000,000		48		20,000,000
aStock split two-for-one during the year.

a. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.

          PWIYear 1: 

          PWIYear 2: 

          VWIYear 1: 

          VWIYear 2: 

b. Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places.

Percentage change in PWI:   %

Percentage change in VWI:   %

c. Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.

  %

6. Given the monthly returns that follow, find the R2, alpha, and beta of the portfolio. Compute the average return differential with and without sign. Do not round intermediate calculations. Round your answers to two decimal places.

Month	Portfolio Return	S&P 500 Return
January	5.5	%	5.8	%
February	-2.5		-3.2
March	-1.7		-1.3
April	2.9		2.0
May	0.7		0.4
June	-0.5		-0.1
July	0.1		0.3
August	1.1		1.3
September	-0.8		-0.6
October	-3.0		-3.4
November	2.3		1.6
December	0.6		0.4

R2:   

Alpha:   %

Beta:   

Average return difference (with signs):   %

Average return difference (without signs)   %