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Company Citigroup Google Stock Price ($/share) $20 $450 Shares Outstanding in Billions) 5.0 0.1 (i) Based on the information provided, construct initial values of each

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Company Citigroup Google Stock Price ($/share) $20 $450 Shares Outstanding in Billions) 5.0 0.1 (i) Based on the information provided, construct initial values of each of the 3 types of indexes we discussed in the class (for value and equal-weighted indexes, initial values can be set arbitrarily to 100), and examine how each index value you computed in (i) would change if Citigroup's stock price increases 10% and Google's price drops by 20%. [10 marks] (ii) Compute return on each of the indexes following the events in (ii) and explain why these returns are different from each other. [5 marks] (ii) Suppose you are a fund manager managing $145,000. Assuming you can purchase any fraction of a share as well, how many shares in each of these companies will you have to buy to replicate the performance of each of the indexes? [10 marks] (iv) In order to track the performance (returns) of each of the indexes, will you have to rebalance your holdings of each stock when prices change? [5 marks]

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