Suppose XYZ were to do a share split of two to one and the share price falls to K50. (1) Calculate the new divisor that would leave the index unchanged. Explain why this is done. What is a share split, and why is this done? Discuss Suppose XYZ’s final price increases to K110, while ABC price, calculate the percentage change in the price weighted index of the two stocks. Compare that to the percentage return of a portfolio that holds one share in each company (4)      Assume that it

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Suppose XYZ were to do a share split of two to one and the share price falls to K50.

(1) Calculate the new divisor that would leave the index unchanged. Explain why this is done.

What is a share split, and why is this done? Discuss

Suppose XYZ’s final price increases to K110, while ABC price, calculate the percentage change in the price weighted index of the two stocks. Compare that to the percentage return of a portfolio that holds one share in each company

(4)      Assume that it is held to maturity and the company does not default on it.

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