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# Construct price and value weighted index

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You are given the following information regarding prices for a sample of stocks:

Price
Stock Number of Shares T T + 1
a 1,000,000 60 80
b 10,000,000 20 35
c 30,000,000 18 25

a) Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1 .

b) Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.

c) Briefly discuss the difference in the results for the two indexes.

#### Solution Preview

See the attached file. Thanks

You are given the following information regarding prices for a sample of stocks:

Price
Stock Number of Shares T T + 1
a 1,000,000 60 80
b 10,000,000 20 35
c 30,000,000 18 25

a) Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1 .
Price ...

#### Solution Summary

This post addresses how to construct a price -weighted index and value weighted index for stocks. It discusses the difference in the their results

\$2.19