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Consider the three stocks in the following table P represents price at time t and Qt represents shares outstanding at time t Stock C splits two-for-one in the last period Calculate the rate of

Consider the three stocks in the following table. P, represents price at time t, and Q_t represents shares outstanding at time t. Stock C splits two-for-one in the last period. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). What must happen to the divisor for the price-weighted index in year 2? Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2). Using the data in the previous problem, calculate the first-period rates of return on the following indexes of the three stocks: A market value-weighted index An equally weighted index

 

Apr 11 2020 View more View Less

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