In: Finance
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 | 83 | 100 | 88 | 100 | 88 | 100 |
B | 43 | 200 | 38 | 200 | 38 | 200 |
C | 86 | 200 | 96 | 200 | 48 | 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 |