CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

A price-weighted index in which a $50 stock increased by 10% and a $40 stock decreased by 12.5% would ______

A. decrease by 2.6 points.
B. stay the same.
C. increase by 1.5 points.
Correct Answer: B

The $50 stock would increase by $5. The $40 stock would decrease by $5. The two price changes would exactly cancel each other out in a price-weighted index, so the index would remain unchanged.

User Contributed Comments 2

User Comment
Done 50 + 40 = 90

50(1.10)+ 40(1-.125) = 90

Bibhu another easier method is 50*10-40*12.5=0. So no change.
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