Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the five stocks in the following table. Pt represents price at time t,and Qt represents shares outstanding at time t. Stock C splits 3

Consider the five stocks in the following table. Pt represents price at time t,and Qt represents shares outstanding at time t. Stock C splits 3 for 1in year 2018 and Stock D splits 2 for 1 in year 2019.

Stocks P2017 Q2017 P2018 Q2018 P2019 Q2019
A 170 100 175 100 172 100
B 95 200 98 200 97 200
C 180 200 57 600 60 600
D 100 200 110 200 53 400

a.What is the new divisor for the price weighted index in year 2018?

b.Calculate the rate of return on a price-weighted index of the four stocks form year 2017 to 2018?

c.What is the new divisor for the price weighted index in year 2019?

d.Calculate the rate of return on a price-weighted index of the four stocks form year 2018 to 2019?

e.Calculate the rates of return on a market value-weighted index of the four stocks form year 2017 to 2018?

f.Calculate the rates of return on an equally weighted index the four stocks form year 2018 to 2019?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Mathematics For Economic Analysis

Authors: Knut Sydsaeter, Peter Hammond

3rd Edition

0273713248, 9780273713241

More Books

Students also viewed these Finance questions