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Consider the three stocks in the following table. P+ represents price at time t, and Q+ represents shares outstanding at time t. Stock C
Consider the three stocks in the following table. P+ represents price at time t, and Q+ represents shares outstanding at time t. Stock C splits two-for-one in the last period. (LO 2-2) A B Qo P1 Q P2 90 100 95 100 95 100 8 Q2 50 200 45 200 45 200 100 200 110 200 55 400 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). b. What must happen to the divisor for the price-weighted index in year 2? c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2). 2) End-of-Chapter Problems 23 in Chapter 2 (Pasted as follows)
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