Question 4 (10 marks) Consider the following three stocks constitute an index. Pt represents price at time t and Qt represents no. of shares outstanding at time t.

	P0	Q0	P1	Q1
A	10	10,000	12	10,000
B	50	100	54	100
C	2	2,000,000	1.85	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 1 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)