Consider the data in the table 1.1 for a hypothetical three-stock version of the Dow Jones Average. Pt represents price at time t, and Q represents shares outstanding at time t.

Table 1.1

(a) Calculate the rate of return on a price-weighted index of the 3 stocks for the first period (t=0 to t=1).  

(b) Calculate the rate of return on a market value-weighted index of the 3 stocks for the first period (t=0 to t=1).

(c) Calculate the rate of return on an equally weighted index of the 3 stocks for the first period (t=0 to t=1).

Stock Qo P1 Q1 P2 Q2 80 100 85 100 85 100 PQR 40 200 35 200 35 200 XYZ 90 200 100 200 45 400