Question

Suppose there is a simple index of two stocks - stock A and stock B. Stock A
opens on Monday with 7500 shares at $4.75 per share. Stock B opens on
Monday with 2500 shares at $8.95 per share. Stock A opens on Tuesday at
$4.50 per share, and stock B opens on Tuesday at $8.15 per share. Both
stocks have the same number of shares that they opened with on Monday.
What is the rate of change of this simple index over 1 day?

Answer 1

A. -6.7       .......APE.X -_-

Answer 2

The answer is Option A,-6.7%.

A Stock Index is a tool used in financial markets to track a market or a specific segment of the market as a whole instead of tracking the performance of a single company's stock.

How to find the rate of change of this simple index over 1 day?

Total value, Monday:

7,500 * 4.75 + 2,500 * 8.95

= $58,000

Total value, Tuesday:

7,500 * 4.50 + 2,500 * 8.15

=$54,125

The Rate of change of a simple Index is given by:

The calculation for ROC is simple in that it takes the current value of a stock or index and divides it by the value from an earlier period.

Thus, the rate of change of this simple index over 1 day is

1- $54,125/$58,000

=> 1-0.9333189

=>0.0668103448

=> 6.7% [ After rounding off]

The Rate of change will be negative because the stock is decreasing from Monday to Tuesday.

Thus, ROC is -6.7 %.

Learn more about the rate of changes on: https://brainly.com/question/10725719

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