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Suppose you invest in a portfolio that tracks a value-weighted index, which is constructed with the following two stocks and uses a divisor of 100.

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Suppose you invest in a portfolio that tracks a value-weighted index, which is constructed with the following two stocks and uses a divisor of 100. Calculate the rate of return of your portfolio for the second year: Year O Year 1 Stock Number of shares Stock Number of shares outstanding price outstanding Price Stock A $100 100 $105 100 Stock B $50 50 $60 50 12.50% 10% 8% 13.33%

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