Consider the three stocks in the following table. Pe represents price at time t, and 0 represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 98 58 116 Rate of return Divisor %0 100 200 53 200 126 P₁ 103 Rate of return Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to f= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) % 01 100 200 200 P2 103 53 63 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.) 92 100 200 400 % c. Calculate the rate of return of the price-weighted index for the second period (t-1 to t=2).

College Algebra
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ISBN:9781337282291
Author:Ron Larson
Publisher:Ron Larson
Chapter5: Exponential And Logarithmic Functions
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Consider the three stocks in the following table. P+ represents price at time t, and 0 represents shares outstanding at time t. Stock C
splits two-for-one in the last period.
B
C
Pe
98
58
116
Divisor
%0
100
200
200 126
P1
103
53
Rate of return
Required:
a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t= 1). (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
Rate of return
%
01
100
200
200
P₂
103.
53
63
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.)
92
100
200
400
%
c. Calculate the rate of return of the price-weighted index for the second period (t-1 to t=2).
Transcribed Image Text:Consider the three stocks in the following table. P+ represents price at time t, and 0 represents shares outstanding at time t. Stock C splits two-for-one in the last period. B C Pe 98 58 116 Divisor %0 100 200 200 126 P1 103 53 Rate of return Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return % 01 100 200 200 P₂ 103. 53 63 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.) 92 100 200 400 % c. Calculate the rate of return of the price-weighted index for the second period (t-1 to t=2).
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