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4. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Po
4. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Po Qo P1 Q1 P2 Q2 A 90 100 95 100 95 100 B 50 200 45 200 45 200 C 100 200 110 200 110 200 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (from t = 0 to t = 1). b. Calculate the divisor for the price-weighted index if stock C splits 2:1 at t = 1. c. Calculate the rate of return for the price-weighted index for the second period (t = 1 to t = 2) after stock C splits 2:1 at t = 1. d. What will be the divisor from periods t = 3 onwards if no splits are expected? e. Calculate the first-period rate of return (from t = 0 to t = 1) on a market-value-weighted index. f. Calculate the first-period rate of return (from t = 0 to t = 1) on an equally-value-weighted index.
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