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

question 42

Multiple Choice

A price-weighted index consists of Stocks A, B, and C which are priced at $30, $12, and $18 a share, respectively. The current index divisor is 2.40. If Stock C undergoes a 1-for-3 reverse stock split, the new index divisor will be:

• A)1.92
• B)2.11
• C)2.20
• D)3.08
• E)3.84

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Definitions:

Risk of Loss

The potential for an investment or transaction to result in a decrease in value or financial loss.

Identified

Recognized or established as being a particular entity or thing.

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A legal term describing a transaction or agreement that may be annulled or voided at the discretion of one party.