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Consider the three stocks in the following table. Pe represents price at time t, and ot represents shares outstanding at time t. Stock C

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Consider the three stocks in the following table. Pe represents price at time t, and ot represents shares outstanding at time t. Stock C splits two-for-one in the last period. Po 00 P1 01 P2 02 A 82 100 87 100 87 100 B 42 200 37 200 37 200 C 84 200 94 200 47 400 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 4.81 % 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 f=2). Rate of return (22) %

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