Question
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C
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. PO 20 P1 01 P2 22 94 100 99 100 99 100 B 54 200 108 200 49 118 200 200 49 200 59 400 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to += 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return 3.90 % 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 . Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2). Rate of return 0%
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