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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

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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. ABC 00 P1 Q1 P2 Q2 70 475 75 475 75 475 45 50 850 40 300 60 850 40 300 30 850 600 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 % b. Calculate the new divisor for the price-weighted index in year 2. (Do not round intermediate calculations. Round your answer to decimal places.) New divisor _ c. Calculate the rate of return for the second period (t = 1 to t = 2). (Round your answer to 2 decimal places.)

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