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Consider the three stocks in the following table. represents price at time, and represents shares outstanding at time. (Total 25 points) Po lo Q1 P2
Consider the three stocks in the following table. represents price at time, and represents shares outstanding at time. (Total 25 points) Po lo Q1 P2 Q2 A 85 200 95 200 100 200 B 40 500 50 500 25 1,000 70 300 80 300 90 300 a. Calculate the rate of return on a market value-weighted index of the three stocks for the first period (t=0 to t=1). (5 points) b. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). (5 points) c. What is the divisor for the price-weighted index in year 2? (5 points) d. Calculate the rate of return on a price-weighted index of the three stocks for the second period (t=1 to t=2). (5 points) e. Calculate the rate of return on an equally-weighted index of the three stocks for the second period (t=1 to t=2). (5 points)
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