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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

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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 splits two-for-one in the last period. P1 Q1 P2 Q2 A 83 100 88 100 88 100 B 43 86 200 38 200 200 96 200 38 48 200 400 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return 4.71% b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Divisor 2.35 c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2). Rate of return %

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