950

/in /by

4. The market consists of the following stocks. Their prices andnumber of shares are as follows:

Stock    Price     Number ofShares Outstanding

A          $10               100,000

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B           20                10,000

C           30               200,000

D           40                50,000

a. The price of Stock C doubles to $60, what is the percentageincrease in the market if a S&P 500 type of measure of themarket is used?

b. Repeat question (a) but use a Value Line type of measure ofthe market (i.e., a geometric average) to determine the percentageincrease.

c. Suppose the price of stock B doubled instead of stock C. Howwould the market have fared using the aggregate measures employedin (a) and (b)? Why are your answers different?