Assume you have $1 million Cash and are trying to choose among three securities to invest.

a. Security A is a price weighted index of the following three stocks with the corresponding price information in period 0 and period 1 (assume the initial index divisor is 3):

Stock	Initial date (t=0)		Final Date (t=1)
	Price	Shares Outstanding	Expected Price
A1	$20	100	$25
A2	$30	500	$30
A3	$40	600	$44

b. Security B is a value weighted index of the following three stocks with the corresponding price information in period 0 and period 1 ((assume the initial index divisor is 100):

Stock	Initial date (t=0)		Final Date (t=1)
	Price	Shares Outstanding	Expected Price
B1	$50	800	$100
B2	$60	500	$80
B3	$70	600	$60

c. Security C is a single security with the following expectations:

State of the Market	Probability	Final Date (t=1) Ending Price	Holding Period Return (Including dividends; From t=0 to t=1)
Boom	0.4	$200	25%
Normal	0.4	$180	10%
Recession	0.2	$150	-15%

Given the above answer:

a). What is the single period expected return for Security A & Security B, respectively?

b). What is the single period expected return for Security A if stocks A1 and A2 were to split 2 for 1 and 4 for 1, respectively, after period 0?