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1. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C
1. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. 1. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). 2. What must happen to the divisor for the price-weighted index in year 2 ? 3. Calculate the price-weighted index for the second period (t=1 to t=2). 2. Using the data in Problem 11, calculate the first period rates of return on the following indices of the three stocks: 1. A market-value-weighted index 2. An equally weighted index
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