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

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.

P0 Q0 P1 Q1 P2 Q2
A 75 375 80 375 80 375
B 95 850 90 850 90 850
C 55 1,050 60 1,050 30 2,100

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.)

b. Calculate the new divisor for the price-weighted index in year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return for the second period (t = 1 to t = 2). (Round your answer to 2 decimal places.)

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