Consider the Following Three Stocks Assume at These Prices That the Value-Weighted Index Constructed with \text

question 64

Multiple Choice

Consider the following three stocks: $\begin{array}{lll}\text { Stock } & \text { Price Number of shares}& \text { outstanding } \\\text { Stock A } & \$ 40 & 200 \\\text { Stock B } & \$ 70 & 500 \\\text { Stock C } & \$ 10 & 600\end{array}$
Assume at these prices that the value-weighted index constructed with the three stocks is 490. What would the index be if stock B is split 2 for 1 and stock C 4 for 1?

• A) 265
• B) 430
• C) 355
• D) 490
• E) 1000

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Definitions:

Annual Cash Dividends

The total amount of cash dividends that a company pays to its shareholders in one fiscal year.