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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
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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