HPR question

This is from scheweser book 6 exam 2 afternoon session question 87, does anyone know how to solve this? I left out the # of shares for each stock in the index, I didn’t think it was needed… I understand the Index result, but I don’t understand the HPY result. Thanks in advance for your help. Dec 2005 Dec 2006 stock a: $10 $15 stock b: $40 $30 stock c: $50 $25 Assuming that Dec 2005 is the beginning date of the index, the price-weighted index on Dec 2005 and the holding period return on a price-weighted index for the year are closest to: Index HPY A 100 -36% B 33.33 -36% C 100 -30% D 33.33 -30%

d. index 2005: 100/3=33.33 hpy: 70/100=0.7 or a loss of 30%

Yeah, that’s what I thought, book says answer is B, hpy is -36%, any idea why?

is it D? index is just the arithmetic average. dec '05: 10+40+50=100/3=33.33. dec '06: 10+30+25=70/3=23.33 HPY = 23.33-33.33/33.33=(30%)

Never mind, this one is on their errata list. It is D, but the book misprinted as B, 1/2 hour down the drain… :slight_smile:

would still go with d, but not really sure how they come up with those numbers then… prob others can throw their 2 cent in

alright then… :slight_smile:

-30% is right. I jst checked thesoln . The ans is wrongly marked B

could someone post the link to schweser errata list again? appreciate it