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.
P0 | Q0 | P1 | Q1 | P2 | Q2 | |
A | 130 | 135 | 135 | 135 | 135 | 135 |
B | 125 | 270 | 120 | 270 | 120 | 270 |
C | 250 | 270 | 260 | 270 | 135 | 540 |
Calculate the first-period rates of return on the following indexes
of the three stocks (t = 0 to t = 1): (Do
not round intermediate calculations. Round your answers to 2
decimal places.)
a. A market-value-weighted index.
b. An equally weighted index.
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