Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B and C from time period 1 to time period 2? Q(1) 100 200 200 B OO zero P(1) 95 C 45 100 -20.83% 20.83% None of the above P(2) 95 45 50 Q(2) 100 200 400

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t.
Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B,
and C from time period 1 to time period 2?
B
C
zero
P(1)
95
45
100
-20.83%
20.83%
None of the above
Q(1)
100
200
200
P(2)
95
45
50
Q(2)
100
200
400
Transcribed Image Text:Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t. Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B, and C from time period 1 to time period 2? B C zero P(1) 95 45 100 -20.83% 20.83% None of the above Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400
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