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3. Consider a stock market with the following three stocks only. P represents price at time t, and Qt represents shares outstanding at time t.

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3. Consider a stock market with the following three stocks only. P represents price at time t, and Qt represents shares outstanding at time t. Stock B splits two-for-one in the last period Stock Po Pi 10 50 14 Qi 30 20 50 P2 20 25 50 16 20 40 50 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (to to ti) b. What must happen to the divisor for the price-weighted index in t2? c. Calculate the rate of return of the price-weighted index for the 2nd period (t to t)

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