CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Assume the following information about an equally weighted index comprised of 3 stocks: A, B, and C.

Security | Price (Beginning) | Price (End) | Total Dividends
A | 5 | 6 | 1
B | 8 | 7 | 0
C | 10 | 15 | 2

The price return of the index is ______.
A. 19.2%
B. 18.8%
C. 32.5%
Explanation: The price return of A: (6-5) / 5 = 20%. The price return of B: (7-8) / 8 = -12.5%. The price return of C: (15 - 10)/10 = 50%. Since the index is equally weighted, the price of the index is (1/3) 20% + (1/3) (-12.5%) + (1/3) 50% = 19.2%.

User Contributed Comments 7

User Comment
smit0745 guess you don't use the price adjusted for dividends on price return
akils none of the indices consider dividend income, except for the "Total return index".
iankip58 That dividend is a curve ball
farhan92 or a doosra if you're into your cricket.
tomalot No-one is into cricket.
ascruggs92 farhan92, if your name didn't give it away that you're Indian, that cricket comment did.
rojaslav tomalot hahah
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