A Price-Weighted Index Consists of Stocks A, B, and C

question 62

Multiple Choice

A price-weighted index consists of Stocks A, B, and C, which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if Stock B undergoes a 3-for-1 stock split?

• A)2.1684
• B)2.2553
• C)2.5890
• D)2.7000
• E)3.1447

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Definitions:

Net Operating Income

A company's total income from operations, excluding expenses and taxes.

Facility Expenses

Costs related to the physical space where business operations occur, such as rent, utilities, and maintenance.

Manufacturing Overhead

All indirect manufacturing costs, including indirect labor, materials, and utilities necessary for production, but not directly associated with specific units.

Planning Budget

A budget created at the beginning of the budgeting period, reflecting the expected costs and revenues based on forecasted levels of activity.