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Author Question: A popular value-weighted index is constructed out of shares in the two companies, shown in the table ... (Read 24 times)

viki

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on: Apr 25, 2021
A popular value-weighted index is constructed out of shares in the two companies, shown in the table below. On Day 1 you construct a portfolio that mimics the index with 15% invested in Company 1 and 85% invested in Company 2. On Day 2, what trades do you need to make in order to adjust your portfolio weights so that your portfolio earns the same return as the index from Day 2 to Day 3?

​Company 1Company 1Company 2Company 2
DayPrice# of Shares OutstandingPrice# of Shares Outstanding
16.6240010.001,500
27.5340010.541,500
38.8240011.071,500

◦ Buy more of Company 1 and buy more of Company 2
◦ Buy more of Company 1 and sell some of Company 2
◦ Sell some of Company 1 and sell some of Company 2
◦ Sell some of Company 1 and buy more of Company 2
◦ Make no trades
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by viki on Apr 25, 2021

dyrone

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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viki

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Reply 2 on: Apr 25, 2021
Excellent

Chelseyj.hasty

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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