SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
FALL 2016

Assignment 2
Security-Market Indexes

Problem 1. Using the information in the Table below, please, answer the following two questions:

Dec 31, 2011 Dec 31, 2012
Case A Case B
Stock No of Shares Price Value Price Value Price Value
A 1,000,000 10 13 10
B 6,000,000 15 15 15
C 5,000,000 20 20 25
Total
Index Value

Questions:
a. Compute the market value of the portfolio as of December, 31, 2011. Compute the value of the portfolio as of December 31, 2012 for Case A and Case B.
b. What is the index value in Case A and Case B if the 2011 market value is used as a basis (100%)?

Solution:

Problem 2. Using the information in the Table below, please, answer the following three questions:

December 31, 2011 December 31, 2012
Stock No of Shares Price Value No of Shares Price Value Percentage change
X 2,000,000 $20 2,000,000 $30
Y 8,000,000 15 8,000,000 20
Z 10,000,000 30 10,000,000 35
Total
Equal Weighted
Index
Market Value Weighted Index

Questions:
a. Compute the market value of the portfolio as of December, 31, 2011. Compute the value of the portfolio as of December 31, 2012.
b. What is the percentage change for each stock and for the whole portfolio?
c. What is the index value if it is computed as Equally Weighted index and Market Value Weighted Index, respectively?

Solution: