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Consider the three stocks in the following table. Pt represents price at time t, and Ot represents shares outstanding at time t. Stock C splits
Consider the three stocks in the following table. Pt represents price at time t, and Ot represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B Pe 92 52 104 100 200 200 P1 97 47 114 01 100 200 200 P2 97 47 57 02 100 200 400 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 4.03% 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 2.34 c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t= 2). Rate of return %
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