Indecies Flashcards
1
Q
market cap
A
share price * outstanding shares
unaffected by split
2
Q
Price weighted indecies
A
sum of stock prices / n of companies
priciest stock has the biggest influence
DJIA is an example
3
Q
PWA and splits
A
splits will change the stock price and we will have to adjust
4
Q
Handling splits
A
- multiply numerator by split ratio
- use market cap because it is not affected by split
- find a new divisor using the new stock price
5
Q
Value weighted indicies
A
weight = company market cap / total market cap
follow the highest MC / weight
6
Q
Calculating new value index
A
multiply the old equity value by 1+% change
