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

question 25

Multiple Choice

A price-weighted index consists of stocks A,B,and C which are priced at $50,$35,and $15 a share,respectively.The current index divisor is 2.75.What will the new index advisor be if stock A undergoes a 5-for-1 stock split?

• A) 0.40
• B) 0.65
• C) 1.00
• D) 1.65
• E) 1.85

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