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You are given the following information for three stocks: Stock Price on 1/1/2021 Price on 12/31/2021 Shares (million) A $20 $25 15 B $35 $15
You are given the following information for three stocks: Stock Price on 1/1/2021 Price on 12/31/2021 Shares (million) A $20 $25 15 B $35 $15 30 $90 $150 1 A) (10 points) Construct a price-weighted index value for the three stocks on 1/1 and 12/31. What was the rate of return based on these numbers? B) (10 points) Suppose now that stock C had a 1:2 reverse stock split during 2021 and the price on 12/31/2021 was $300? Recalculate the price-weighted index for 12/31/2021. What is the divisor? (A 1:2 reverse stock split means that every 2 shares you own become 1 share) Ignore the stock split for questions C and D. C) (10 points) What is the return on a value-weighted portfolio for 2021? D) (10 points) What is the return on an equal-weighted portfolio for 2021? You are given the following information for three stocks: Stock Price on 1/1/2021 Price on 12/31/2021 Shares (million) A $20 $25 15 B $35 $15 30 $90 $150 1 A) (10 points) Construct a price-weighted index value for the three stocks on 1/1 and 12/31. What was the rate of return based on these numbers? B) (10 points) Suppose now that stock C had a 1:2 reverse stock split during 2021 and the price on 12/31/2021 was $300? Recalculate the price-weighted index for 12/31/2021. What is the divisor? (A 1:2 reverse stock split means that every 2 shares you own become 1 share) Ignore the stock split for questions C and D. C) (10 points) What is the return on a value-weighted portfolio for 2021? D) (10 points) What is the return on an equal-weighted portfolio for 2021
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