Question

In: Finance

Consider the three stocks in the following table. P(t) represents price at time t, and Q...

Consider the three stocks in the following table. P(t) represents price at time t, and Q (t) represents share 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

90

100

95

100

95

100

B

50

200

45

200

45

200

C

100

200

110

200

55

400

  1. First, calculate the price weighted indexes at t=0 and t=1. Based on the two numbers calculate the rate of return.

  2. What must happen to the divisor for the price-weighted index in year 2?

  3. Calculate the price weighted index at t=2. Based on the index number at t=1 and t=2, calculate the rate of return.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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