Consider the three stocks in the following table. F, represents price at time t, and o, represents shares outstanding at time t Stock C splits two-for one in the last period. A C Rate of retur Po 96 56 Divisor Co 100 200 2 101 51 122 Rate of return 9 100 200 Pa 101 51 Required: 8. Calculate the rate of return on a price weighted index of the three stocks for the first period (t-0 to 7-1) (Do not round intermediate calculations. Round your answer to 2 decimal places.) 9₂ 100 200 400 b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places) c. Calculate the rate of return of the price-weighted index for the second period (t-1 to 1-2).
Consider the three stocks in the following table. F, represents price at time t, and o, represents shares outstanding at time t Stock C splits two-for one in the last period. A C Rate of retur Po 96 56 Divisor Co 100 200 2 101 51 122 Rate of return 9 100 200 Pa 101 51 Required: 8. Calculate the rate of return on a price weighted index of the three stocks for the first period (t-0 to 7-1) (Do not round intermediate calculations. Round your answer to 2 decimal places.) 9₂ 100 200 400 b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places) c. Calculate the rate of return of the price-weighted index for the second period (t-1 to 1-2).
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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Ff.184.
Transcribed Image Text:Consider the three stocks in the following table. P, represents price at time t, and o, represents shares outstanding at time t Stock C
splits two-for-one in the last period.
C
Rate of retur
Pa
06
56
112
Divisor
So
100
200
200
Rate of return
B
101
51
122
9
100
200
200
Pa
101
61
Required:
a. Calculate the rate of return on a price weighted index of the three stocks for the first period (r=0 to 1-1) (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
9₂
100
200
400
b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2
decimal places.)
c. Calculate the rate of return of the price-weighted index for the second period (t-1 to 2-2).
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