Suppose there is a simple index of three stocks, stock ABC, stock XYZ, and stock QRS. Stock ABC opens on day 1 with 8000 shares at $4.25 per share. Stock XYZ opens on day 1 with 5000 shares at $2.90 per share. Stock QRS opens on day 1 with 2000 shares at $6.40 per share. The price of stock ABC on day 8 begins at $3.90. The price of stock XYZ on day 8 begins at $2.50. Stock QRS opens on day 8 with a price of $6.10 per share. Assume that each stock has the same number of shares that it opened with on day 1. What is the rate of change of this simple index over 1 week?

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Ayoushivtgo Ayoushivtgo · Answer 1

The rate of change of this simple index over 1 week is - 8.81%

The rate of change is the ratio of the difference in the value of the simple index to the original value of simple index.

Total value of the simple index at day 1 = (8000 x $4.25) + (5000 x $2.90) + (2000 x $6.40) = $61,300

Total value of the simple index at day 8 = (8000 x $3.90) + (5000 x $2.50)+(2000*6.10) = 55900

the rate of change of this simple index over 1 week

= (55900-61300)/ 61300 * 100 %

= -8.81 %

the rate of change of this simple index over 1 week is - 8.81%

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