The table below describes the price per share (P) and the number of shares outstanding (Q) at time = 0 and then again at time 1. The subscripts indicate which time (t = 0 or 1) that the information applies to. Stock A Stock B Po 90 50 Qo 100 200 P₁ 95 45 Q1 100 200 (A) What is the "market cap" for Stock A at time 0? (B) Assume you have an index that includes only these 2 stocks. What is the value-weighted rate of return for the index from time 0 to time 1? Choose the answer closest to the correct number. -0.026 9000 (C) Assume someone asked you calculate the equal-weighted return for a portfolio that included these 2 stocks. What is the equal-weighted return from time O to time 1? 0.055
The table below describes the price per share (P) and the number of shares outstanding (Q) at time = 0 and then again at time 1. The subscripts indicate which time (t = 0 or 1) that the information applies to. Stock A Stock B Po 90 50 Qo 100 200 P₁ 95 45 Q1 100 200 (A) What is the "market cap" for Stock A at time 0? (B) Assume you have an index that includes only these 2 stocks. What is the value-weighted rate of return for the index from time 0 to time 1? Choose the answer closest to the correct number. -0.026 9000 (C) Assume someone asked you calculate the equal-weighted return for a portfolio that included these 2 stocks. What is the equal-weighted return from time O to time 1? 0.055
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:The table below describes the price per share (P) and the number of shares outstanding (Q) at
time = 0 and then again at time = 1. The subscripts indicate which time (t = 0 or 1) that the
information applies to.
Stock A
Stock B
Po
90
50
Qo
100
200
P₁
95
45
Q₁
100
200
(A) What is the "market cap" for Stock A at time 0? 9000
(B) Assume you have an index that includes only these 2 stocks. What is the value-weighted rate
of return for the index from time O to time 1? Choose the answer closest to the correct number.
-0.026
(C) Assume someone asked you calculate the equal-weighted return for a portfolio that included
these 2 stocks. What is the equal-weighted return from time 0 to time 1?
0.055
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