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1. Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time 1. Stock C
1. Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time 1. Stock C splits two for one in the last period. A B 90 50 100 Q 100 200 200 95 45 110 Q 100 200 P 95 45 55 100 200 400 200 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (1 - 0 to 1-1), 6. What must happen to the divisor for the price-weighted index in year 2? c. Calculate the rate of return for the second period (t = 1 to 1 = 2). d. Calculate the first-period rates of return on a market-value-weighted index. e. Calculate the first-period rates of return on an equally-weighted index
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