A composite index was made with a base of 100. Parameters were fixed for making investment in stock based on sector as under: Banking and Finance: 30% Information Technology: 20% Metals: 20% Real Estate: 10% FMCG: 10% Ph

CS Professional · Capital Commodity and Money Market · PYQS · June 2018
A composite index was made with a base of 100. Parameters were fixed for making investment in stock based on sector as under: Banking and Finance: 30% Information Technology: 20% Metals: 20% Real Estate: 10% FMCG: 10% Pharmaceuticals: 10% Returns derived from these Stocks/Sectors after the end of one year are given below: Banking & Finance: 20% Information Technology: Nil Metals: 30% Real Estate: 10% FMCG: 15% Pharmaceutical: (-) 25% Calculate the index value.

Answer & Explanation:

Answer 4 - Index Value Calculation Sector Weightage (%) Return (%) Weighted Return Banking and Finance 30 20 30 * 0.20 = 6 Information Technology 20 Nil 20 * 0 = 0 Metals 20 30 20 * 0.30 = 6 Real Estate 10 10 10 * 0.10 = 1 FMCG 10 15 10 * 0.15 = 1.5 Pharmaceuticals 10 -25 10 * (-0.25) = -2.5 Total Value 12 Hence, the Index Value at the end of the Year shall be 100 (Base) + 12 = 112

Topics: Market Index Calculation

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