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. |
P_{0} | Q_{0} | P_{1} | Q_{1} | P_{2} | Q_{2} | |
A | 99 | 100 | 104 | 100 | 104 | 100 |
B | 59 | 200 | 54 | 200 | 54 | 200 |
C | 118 | 200 | 128 | 200 | 64 | 400 |
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 | % |
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.) |
Divisor |
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