2. There are two stocks, A and B, with the following information: Stock A Stock B Price (PA) Share Outstanding Price (PB,t) Share Outstanding t=0 60 750 40 1000 t=1 80 750 60 1000 (a) Suppose the initial divisor is 1, i.e. Do=l, construct a price-weighted index using the two stocks. What are the index level 12.0, and 12,1 at time 0 and 1, respectively, and the return from t=0 to t=1? (b) When there was a 2-for-1 stock split for stock A at t=1, what is divisor, D? Does the index level change? (c) If you have $200, how would you construct a portfolio that mimics the price-weighted index? What is the return of your investment? (no split) (d) Assuming the divisor y = 1000, construct a value-weighted index using the two stocks, that is find Iv.0 and Iv.1. What is the index retuin (no split) (e) If the initial index level Le,o=100, construct an equal weighted index using the two stocks, that is find Le,1, and compute its return