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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. A B
4. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. A B 90 50 100 Qo 100 200 200 P1 95 45 110 Q1 100 200 200 P2 95 45 Q2 100 200 200 110 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
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