Question
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
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