Question 4 (10 marks) Consider the following three stocks constitute an index. Prepresents price at time t and Q represents no. of shares outstanding at time t. B P. 10 50 2 Qo 10,000 100 2,000,000 P 12 54 1.85 QI 10,000 100 2,000,000 a) Compute rate of return of each stock at time 1. (3 marks) b) Compute percentage change of the index value at time I given it is (i) value-weighted index and (ii) price-weighted index. (4 marks) c) Assuming price-weighted scheme is adopted, compute the new divisor if Stock P, $8 per share, replaces Stock C after market close at time 0. (3 marks) - End