Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock market behavior. Prices per share for a year 1 base period, January year 3, and March year 3 follow. Base-year quantities are set on the basis of historical volumes for the four stocks. Stock Industry Year 1 Quantity Price per Share ($) Year 1 Base January Year 3 March Year 3 A Oil 100 31.50 24.75 22.50 B Computer 150 65.00 49.00 45.50 C Steel 75 40.00 31.00 29.50 D Real Estate 50 18.00 6.50 2.75 a. Compute the price relatives for the four stocks making up the Boran index.
Price Relative Stock January March 70.3 78.3 A B 75.4 78.2 77.5 73.8 D 32.5 13.8
b. Use the weighted average of price relatives to compute the January year 3 and March year 3 Boran indexes.