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Question:
A stock index consists of two stocks. As of January 1:
Company A has 50 shares outstanding valued at $2 each. br>• Company B has 10 shares outstanding valued at $10 each.
The price-weighted index is 6, and the value-weighted index is 100.
On June 30, the price of Company A’s stock has increased to $4 per share. Effective the morning of July 1, Company B’s stock splits two-for-one and is priced at $5. The opening values of the price-weighted index and the value-weighted index on July 1 are: Price-weighted and Value-weighted
A
7 and 150
explanation
1212A Price-weighted index 
. A price-weighted index is not affected by a split. The divisor is adjusted to account for the price change.
Value-weighted index = 
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