1. Using the stock price and shares outstanding data found in the Question 4-5 tab in your Excel data file, calculate the annual returns in years 1-10 for a price-weighted index, a value-weighted index, and an unweighted (i.e. equally weighted) index and answer the following: (2 points eachdisplay divisors as numbers rounded to two decimals and returns as percentages rounded to two decimals.)
   1. The price-weighted index divisor in year 5, following a 3:1 split in EFG is:
   2. The price-weighted index divisor in year 7, following a 1:2 reverse split in ABC is:
   3. The annual arithmetic mean return for the price-weighted index is:
   4. The annual geometric mean return for the price-weighted index is:
   5. The annual arithmetic mean return for the value-weighted index is:
   6. The annual geometric mean return for the value-weighted index is:
   7. The annual arithmetic mean return for the unweighted index is:
   8. The annual geometric mean return for the unweighted index is:
   9. Why are the geometric mean returns always smaller than the arithmetic means?

Stock Price						Shares Outstanding
Stock	ABC	EFG	JKL	XYZ		ABC	EFG	JKL	XYZ
Year 0	$12.00	$126.00	$500.00	$75.00		2000	500	75	750
Year 1	$16.13	$172.80	$721.85	$100.24		2000	500	75	750
Year 2	$12.57	$144.14	$619.56	$96.84		2000	500	75	750
Year 3	$13.51	$166.84	$852.08	$131.68		2000	500	75	750
Year 4	$14.98	$199.79	$997.35	$159.39		2000	500	75	750
Year 5	$13.14	$67.66	$1,495.92	$203.84		2000	1500	75	750
Year 6	$14.57	$68.16	$1,529.27	$221.69		2000	1500	75	750
Year 7	$33.28	$72.45	$1,697.79	$260.46		1000	1500	75	750
Year 8	$44.22	$94.18	$2,543.96	$381.93		1000	1500	75	750
Year 9	$26.94	$56.73	$1,290.04	$231.14		1000	1500	75	750
Year 10	$30.15	$65.44	$1,453.87	$289.66		1000	1500	75	750