Consider the following information on 3 stocks:

Period Quantity

Stock P₀ Q₀ P₁ Q₁ P₂ Q₂

A 40 100 50 100 40 100

B 100 50 90 50 100 50

C 30 200 60 200 23 600

a-) Calculate the return on

1. price-weighted
2. value-weighted
3. equally-weighted index from period 0 to period 1.

b-) Why are the returns so different for the same set of stocks for the same period?

c-) What should the new divisor be for period 2 in calculating the price-weighted index?