Answered step by step
Verified Expert Solution
Question
1 Approved Answer
14) Consider the two stocks in the following table. Pt denotes price at time t, and Qt denotes shares outstanding at time t. Stock B
14) Consider the two stocks in the following table. Pt denotes price at time t, and Qt denotes shares outstanding at time t. Stock B had a 2-for-1 split after the market closed on t=1. P1=$50 was stock B's price before the split. As a result of the stock split, price immediately fell to $25 after the market closed on t=1, and shares outstanding increased from 500 to 1000. P1 Q1 P2 Q2 A 150 100 160 100 B 50 500 20 1,000 (2-for-1 split) What would be the value-weighted index return of an index that consists of only A and B, from t=1 to t=2? a) -15% b) -10% c) 0% d) 17.45%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started