Able, Baker, and Charlie are the only three stocks in an index. The stocks sell

Question

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $39, $315, and $116, respectively. If Baker undergoes a 3-for-2 stock split, what is the new divisor for the price-weighted index?(Do not round intermediate calculations. Round your answer to 5 decimal places.)

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $39, $315, and $116, respectively. If Baker undergoes a 3-for-2 stock split, what is the new divisor for the price-weighted index?(Do not round intermediate calculations. Round your answer to 5 decimal places.)

Explanation / Answer

Answer:

Price weighted index = ($39+$315+$116)/3=$156.66667

if baker split 3 for 2 and the price after split price Able $39, Baker $315*2/3=210,Charlie $116, then calculate the value of divisor;
(39+210+116)/divisor= 156.66667
=> divisor = 2.32978

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