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2 Create your portfolio In this question, return always means net simple return. Use the price data in the table below to answer the question.

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2 Create your portfolio In this question, "return" always means "net simple return". Use the price data in the table below to answer the question. You may assume that no dividends have been paid over the course of the holding period. Name Price in Jan 2018 Price in Jan 2019 # of shares outstanding Historic Co. $60 $63 50 Present Ltd. $28 $21 50 Optimistic, Inc. $32 $36 100 (a) Compute the 2018 weights in an i) equal-weighted, ii) price-weighted, iii) value weighted stock index, which includes only the three companies in the table. Com- pute the returns on these three portfolios. (b) Suppose you hold a portfolio of these stocks in order to match the performance of one of the indices from part (a). Note, by the end of 2008, the portfolio weights may change. What adjustments do you have to make in your portfolio at the end of 2008 to maintain the weighting scheme for each of the three indexes, and why

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