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Consider the following data about four stocks over one period: % Change in price $25 $100 Stock A Stock B Stock C Stock D Number
Consider the following data about four stocks over one period: % Change in price $25 $100 Stock A Stock B Stock C Stock D Number of shares 5.000.000 1.500.000 1.000.000 10.000.000 S33 $90 S80 $18 Number of shares 5.000.000 1,500,000 1.000.000 10.000.000 S66 $22 1. Based on the information given, for a price-weighted index of the four stocks calculate: a. The rate of return. b. Assume that Stock D makes a 4-for-1 split at the end of this period, find the new value of the divisor 2. Based on the information given for these stocks, calculate the rate of return on: a. A market value-weighted index. b. An equally-weighted index. 3. Name one disadvantage of a price-weighted index, of a market value-weighted, and of an equally-weighted index
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