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An analyst gathered the following information regarding an equity market index that was created on January 1, 2009 and consists of the following four securities:

An analyst gathered the following information regarding an equity market index that was created on January 1, 2009 and consists of the following four securities:

Securities Price at December 31, 2009 ($) Price at December 31, 2010 ($) Dividend Paid ($) Weight in the Index
A 31 35 2 25%
B 42 48 1 35%
C 27 32 1 20%
D 22 24 3 20%

Assume that dividends are paid at the end of the year.

The following information is also available:

Price return in 2009 = 10.25%

Total return in 2009 = 15.75%

The price return on the index in 2010 is closest to:

  1. 13.75%
  2. 19.66%
  3. 17.75%

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