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Question (10) and (11) are related to the following information. An index has three components, stocks A, B and C. The table below shows the
Question (10) and (11) are related to the following information. An index has three components, stocks A, B and C. The table below shows the prices (P) and number of shares outstanding (N) of the three stocks at time t=0 and t=1. Stock A announces a 3-to-1 stock split at time t=1 (price of stock A in the table at t=1 is after the stock split) (11) If the index is priced-weighted, assuming the initial index divisor before the stock split is 3 . What is the new index divisor at time t=1 ? A. 3.00 B. 3.25 C. 2.51 D. 2.31 (12) If the index is equal-weighted, what is the return from time t=0 to time t=1 on the index? A. 20.00% B. 25.00% C. 30.00% D. 13.33%
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