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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
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 (t=2).
P0 | Q0 | P1 | Q1 | P2 | Q2 | |
A | 45 | 100 | 47.5 | 100 | 47.5 | 100 |
B | 25 | 200 | 22.5 | 200 | 22.5 | 200 |
C | 100 | 200 | 110 | 200 | 55 | 400 |
a. calculate the return on a price-weighted index, a value-weighted index and an equally weighted index of the three stocks, respectively, during the 1st year (t=0 to t=1). b. what must be the new divisor for the price-weighted index in the 2nd year?
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