Consider the three stocks in the following table. P_t represents price at time t, and Q_t represents shares outstanding at time t.

	P0	Q0	P1	Q1
A	60	300	88	300
B	50	200	40	200
C	100	200	112	200

a. Calculate the rate of return on a price-weighted index of the three stocks for the period t=0 to t=1.

b. Calculate the rate of return on a market value-weighted index of the three stocks for the period t=0 to t=1 (use the divisor of 100 for market value-weighted index)

2)

An investor starts with $1 million and converts it to 0.75 million pounds, which is then invested for one year. In a year the investor has 0.7795 million pounds, which she then converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar annual rate of return earned was _____.

	A.	6.45 percent
	B.	5.27 percent
	C.	4.97 percent
	D.	8.26 percent