Assume that there are two stocks in the world (STOCK A and STOCK B) as presented below:

STOCK P0 Q0 P1 Q1

A 35 200 29.75 200

B 30 100 27 100

P0 represents the price per share at time period 0 (today).

Q0 represents the number of shares outstanding at time period 0 (today).

P1 represents the price per share at time period 1 (one year from today).

Q1 represents the number of shares outstanding at time period 1 (one year from today).

Assume that you have a total of $65 to invest on P0.

21) If your portfolio is a PRICE-WEIGHTED AVERAGE (a PRICE-WEIGHTED INDEX) of the two stocks, what is your rate of return over the period (from P0 to P1)?

a. -12.69%

b. -.1269%

c. 12.5%

d. -.125%

e. none of the above (Put the correct answer next to the letter E on the answer sheet.)