The following table gives the prices and # of shares outstanding for 4 stocks in

Question

The following table gives the prices and # of shares outstanding for 4 stocks in a representative stock market. Assume that the prices are as of May 10, 2018. Table 1: Stock prices on May 10, 2018 Market Value (In $1,000) Company Price # of shares $150 S34 $42 S15 20,000 150,000 800,000 450,000 $3,000 S5,100 $33,600 6,750 48,450 Total Market Value as of May 10 1. Compile a price weighted average for May 10, 2018 similar to the Dow Jones Industrial Average using the above four companies (use a divisor of 2.7). For convenience we will call the average the DJIA

Explanation / Answer

price weighted average = sum of share prices / divisor

The divisor is either the number of stocks or a new divisor in case of stock splits. Here the divisor has been mention as 2.7

The DJIA = 150+34+42+15/4 = 241/4 = 60.25

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