Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stöck C splits two-for-one in the last period. A B C Po 82 42 84 Rate of return 00 100 200 200 Divisor P1 87 37 94 01 100 200 200 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.) % P2 87 37 47 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 t=2).
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stöck C splits two-for-one in the last period. A B C Po 82 42 84 Rate of return 00 100 200 200 Divisor P1 87 37 94 01 100 200 200 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.) % P2 87 37 47 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 t=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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Transcribed Image Text:Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C
splits two-for-one in the last period.
A
B
C
Po
82
42
84
00
100
200
200
Divisor
P1
87
37
94
01
100
200
200
P2
87
37
47
92
100
200
400
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 I %
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.)
D
c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t = 2).
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