Sch book 3 LOS 23d, Pg 122
Dear all,
It mentions
‘In an Equal weighted index, all stock returns are given the same weight’.
I thought index use price as one of the input criteria where as for Equal weighted index it mentions stock returns’.
can anyone please clarify.
thank you
Say index is base price was $1000. You have 5 stocks for an equal weighted portfolio.
The returns are 1%, 2%, 3 %, 4%, 5%.
Overall return is 3%. The index should now be $1030. If it’s 3% then the index will become $1060.9.
kys916,
Thank you.
So the sum of the 5 stocks is $1000.00. Am I correct. (each being $300+$50+$40+$80+$530).