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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

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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 two-for-one in the last period. a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). b. What must happen to the divisor for the price-weighted index in year 2 ? c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t=2 ). Using the data in the previous problem, calculate the first-period rates of return on the following indexes of the three stocks: a. A market-value-weighted index. b. An equally weighted index

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