Compute the monthly return on a price-weighted index

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Question - Not all stock market indexes are created equal. Different methods are used to calculate various indexes, and different indexes will yield different assessments of "market performance." Using www.bloomberg.com, retrieve the stock price for five different firms for the last close and the close one month ago. Go to Quick Links-> Stocks and type in the ticker symbol on the search bar. Get the quote; then plot the chart; use the moving line to see the closing price today and one month ago.

Compute the monthly return on a price-weighted index of the five stocks. Show your work.

Compute the monthly return on a value-weighted index of the five stocks. Show your work. (You can assume that market capitalization did not change much in the last month for your stocks.)

Compare the two returns and explain their differences. Explain how you would interpret each measure.

Reference no: EM132180074

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