Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po Qo P₁ Q1 P2 Q2 A 80 250 85 250 85 250 B 30 800 25 800 25 800 C 65 800 80 800 40 1,600 Calculate the rate of return on a price-weighted index of the three stocks for the first period (t-0 to t = 1). Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Calculate the new divisor for the price-weighted index in year 2. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Calculate the rate of return for the second period (t-1 to t-2). Note: Round your answer to 2 decimal places.

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
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Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Stock C splits two for one in the last
period.
Stock Po Qo P₁ Q1 P2 Q2
A
80 250 85 250 85 250
B
30 800 25 800 25 800
C
65 800 80 800 40 1,600
Calculate the rate of return on a price-weighted index of the three stocks for the first period (t-0 to t = 1).
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Calculate the new divisor for the price-weighted index in year 2.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Calculate the rate of return for the second period (t-1 to t-2).
Note: Round your answer to 2 decimal places.
Transcribed Image Text:Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po Qo P₁ Q1 P2 Q2 A 80 250 85 250 85 250 B 30 800 25 800 25 800 C 65 800 80 800 40 1,600 Calculate the rate of return on a price-weighted index of the three stocks for the first period (t-0 to t = 1). Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Calculate the new divisor for the price-weighted index in year 2. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Calculate the rate of return for the second period (t-1 to t-2). Note: Round your answer to 2 decimal places.
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