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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.
| P0 | Q0 | P1 | Q1 | P2 | Q2 |
A | 55 | 65 | 65 | 65 | 65 | 65 |
B | 50 | 130 | 40 | 130 | 40 | 130 |
C | 100 | 130 | 110 | 130 | 60 | 260 |
Calculate the first-period and second-period rates of return on the following indexes of the three stocks |
1. A market-value-weighted index.
2. An equally weighted index.
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