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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. Po Qo P1

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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. Po Qo P1 Q1 P2 Q2 A 85 200 95 200 100 200 B 40 500 50 500 25(2-for-1 splits) 1,000 C 70 300 80 300 90 300 Stock B had a 2-for-1 splits after the market closed on t=1. P1 = $50 was stock B's price before the split. As a result of the stock split, price fell to $25 and shares outstanding increased from 500 to 1000. What is the rate of return on an equal-weighted index of the three stocks for the second period (t=1 to t=2)? c) 5.92% oa) -10.75% od) 42.65% e) Not sufficient information Ob) 5.88%

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