You Have a Value-Weighted Index Made Up of Two Companies

question 16

Essay

You have a value-weighted index made up of two companies. One company, we will call A, has a stock price of $25 per share and there are 10,000 shares outstanding. The other company, we will call B, has a stock price of $100 per share and has 1000 shares outstanding. What will be the percentage change in the index from a 10% increase in the share price of company A? What will be the percentage change in the index from a 10% increase in the share price of company B?

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Definitions:

Collective Identity

The shared sense of belonging to a group, which shapes the members' perceptions, actions, and interactions within the group.

Power

The capacity or ability of individuals or organizations to direct or influence the behavior of others or the course of events.

Bureaucratic Control

The influence of behavior through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision.

Behaviour

The behavior of a person or collective when responding to outside or inside triggers.