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In an imaginary country's stock market, 8 stocks are being traded: A, O, C, TK, JHG, QW, F1K, and PL. The development of these stocks' prices is measured with a stock index, calculated as a weighted mean from the individual price changes. The coefficients are the individual stock's market value ratio to the total market value. What is the stock index at the end of one day, as described below?

| Stock | Price Change | Market Value (€1,000,000) |
|-------|--------------|--------------------------|
| A | +0.67% | 35.0 |
| O | +0.12% | 57.0 |
| C | -0.87% | 2.5 |
| TK | -0.20% | 80.0 |
| JHG | +0.83% | 45.9 |
| QW | +2.89% | 190.2 |
| F1K | -5.68% | 7.84 |
| PL | +6.57% | 97.6 |

Answer :

Final answer:

To calculate the stock index value for the imaginary country, each stock's price change, weighted by its market value, is summed up and then divided by the total market value of all stocks.

Explanation:

In an imaginary country's stock market, a stock index is used to measure the performance of 8 traded stocks: A, O, C, TK, JHG, QW, F1K, and PL. This index is a weighted mean of the individual stocks' price changes, weighted by their respective market values. The student provided the stocks' price changes and their market values in millions of euros. To calculate the stock index value at the end of one day, we would multiply each stock's price change (in decimal form) by its market value, sum these values, and then divide by the total market value of all stocks.

Here's a step-by-step calculation using provided data (converted into decimals):

  • A: 0.0067 * 35
  • O: 0.0012 * 57
  • C: -0.0087 * 2.5
  • TK: -0.0020 * 80
  • JHG: 0.0083 * 45.9
  • QW: 0.0289 * 190.2
  • F1K: -0.0568 * 7.84
  • PL: 0.0657 * 97.6

We then add these weighted changes together and divide by the total market value (sum of all individual market values) to obtain the stock index's change. However, without the base value of the stock index to apply this change to, we cannot give an exact end-of-day index value. The provided figures are for illustrative purposes to show the method of calculation.

Learn more about Stock Index Calculation here:

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