Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Consider the three stocks in the following table. Pt represents price at
time t, and ot represents shares outstanding at time t. Stock C splits two
for one in the last period.
Stock Po
A
50
B
45
с
90 120
20
P1
a. Rate of return
b. Rate of return
21
60
60
60
120 35 120
95 120
02
60
60
35
120
50 240
P2
Required:
Calculate the first-period rates of return on the following indexes of the
three stocks (t = 0 to t = 1):
Note: Do not round intermediate calculations. Round your answers to
2 decimal places.
a. A market-value-weighted index.
b. An equally weighted index.
%
%
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