Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 86 100 91 100 91 100
B 46 200 41 200 41 200
C 92 200 102 200 51 400

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

(Do not round intermediate calculations. Round your answer to 2 decimal places and put it in the following format XX.XX. Do NOT record starting 0's.)

Rate of return %

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 and put it in the following format XX.XX. Do NOT record starting 0's.)

Divisor

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance For Musicians

Authors: Bobby Borg

1st Edition

1538163306, 978-1538163306

More Books

Students also viewed these Finance questions

Question

What magazine and ads did you choose to examine?

Answered: 1 week ago