please send excel file as well Problem 1: Creating an Index [20 pointsl Your tas

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please send excel file as well

Problem 1: Creating an Index [20 pointsl Your task is to create an index, using Excel, from the 6 stocks in the table below. Using the information presented in the following table, answer the following set of questions: a. b. [6] What is the return on the price-weighted index for each of Day 1, Day 2, and Day 3? [6] Now assume the index is value-weighted. What is the return to the value-weighted index on Day 1, Day 2, and Day 3? c. [4] If the index were equal-weighted instead of value-weighted, would the Day 1 return be greater than, less than, or equal to the value-weighted index return in part b? Provide intuition, in addition to a specific numerical return. [4] Compute the index weights at the end of Day 1 for the equal weighted index, assuming any rebalancing has not yet taken place. If the equally weighted index rebalances at the end of each day, what is the required turnover on Day 1? d. Note: The dividend information is presented by ex-date, meaning the day on which the seller receives the dividend, not the buyer.

Explanation / Answer

Stock Ticker Shares outstanding Day 0 Day 1 Return Day 2 Return 2 Day 3 Return 3 NJ 250 57 56 -1.75% 55 -1.8% 56 1.8% CG 350 20 19 -5.00% 18.5 -2.6% 20 8.1% EM 750 30 29 -3.33% 28 -3.4% 29 3.6% AR 1000 125 132 5.60% 133 0.8% 128 -3.8% PL 750 78 80 2.56% 81 1.3% 80 -1.2% SVN 1500 35 36 2.86% 38 5.6% 36 -5.3% Average for Q3 0.16% -0.05% 0.54% Index Value (Price weighted) 1000 1020.29 1024.638 1011.594 Return Q1 2.03% 0.43% -1.27% Value Weighted 1000 1030.92 1043.7 1017.873 Return Q2 3.09% 1.24% -2.47% Equal weighted index 1000 1001.556 1001.051 1006.458 Return Q3 0.16% -0.05% 0.54% Factors to make index 1000 on day 0 Dividends Paid Factor 1 Factor 2 Stock Ticker Day 0 Day 1 Day 2 Day 3 0.0575 279.75 NJ 0.25 CG EM AR 5 PL SVN

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