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 2 for 1 in the last period. Stock Price (PO) Share outstanding (QO) Price (P1) Share outstanding (Q1) A $95 100 $100 100 B $45 200 $40 200 $110 200 $120 200 a) Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = O to t = 1). (4points) b) Calculate the market-weighted index of the three stocks for the first period (t = 0 to t = 1). (4 points) c) What must happen to the divisor for the price-weighted index to account for the stock split? (4 points)
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
9th Edition
73530700, 978-0073530703
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