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    Construct both a price weighted and value weighted index

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    You have decided to construct your own index to measure consumer confidence. You have chosen the following three companies Wal-Mart Stores Inc (WMT), Target Corp (TGT) and Kroger Co. (KR). Using monthly prices from August 2008 through August 2010, Construct both a price weighted and value weighted index. Use a beginning index of 100 where appropriate. What are the monthly returns for your two indexes? Compare your returns to the DJIA and S&P 500 respectively. Do you have any comments on the returns?

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    Solution Preview

    See the attached file. Thanks

    1. In general, return on the four indices follows the same pattern in general.
    2. We see negative consumer confidence during Sept'08 to Feb'09, followed by a slight positive phase till April'10. Since, then it is alternating between ...

    Solution Summary

    Shows how to construct your own index to measure consumer confidence. Using data for Wal-Mart Stores Inc (WMT), Target Corp (TGT) and Kroger Co. (KR), shows constructing both a price weighted and value weighted index.

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