Module 03 – In Class Group Assignment #2
Student #1:
Student #2:
Student #3:
Student #4:
Student #5:
Student #6:
Read the HBS case The Nikkei 225 Reconstitution (9-207-109). The following questions can help your group prepare to
discuss the case in class. Answers the following questions will not fully prepare your group. Students should be able
answer the question: What should Taka Haneda do? What trades should Haneda place? Stocks? Amounts? Timing?
1.
What type of event typically conveys more information about
a company’s future prospects? Check the box that best applies:
 Index Additions
 Dividend Increases
2.
For deletion 4022 Rasa Industries, what is the value of Pi / (FVi / 50)
before the reconstitution?
__________________
Which of the additions has the largest positive ratio of its
index weight after the reconstitution to its market cap weight?
Calculate (Index Wgt After ÷ Mkt Cap Wgt). Give the TSE code:
__________________
Which of the deletions has the largest positive ratio of its index weight
before the reconstitution to its market cap weight? Calculated as
Index Wgt Before ÷ Mkt Cap Wgt. Give the TSE code:
__________________
For all 195 remainders, the index weight will drop after the
reconstitution. Which company is expected to have the largest drop
in index weights (assume constant prices)? Give the TSE code:
__________________
For the remainders, calculate the change in the index weight times the
total amount indexed (given in JPY on p.1 of the case). Which stock
has the most negative value? Give the TSE code:
__________________
3.
4.
5.
6.
7.
For the remainders, calculate the average daily volume in JPY. To
estimate this quantity, multiply the daily volume in shares by the price.
Which stock has the highest volume in JPY? Give the TSE code:
__________________
8.
For all remainders, calculate the ratio of your answer to #6 to #7 ( 6 ÷ 7 ).
Which stock has the most extreme/negative value? Give the TSE code:
__________________
9.
Whom do market makers prefer to trade against?
Check the box that best applies
 Investors with information
 Investors who need to
liquidate a position
Simplifying assumption. We are going to look at change in index weights and assume the change in market weights
are close to zero. We will use only one market cap (in JPY bn) for the whole assignment.
Score: