Consider the three stocks in the following table. Pt represents price at time t, and Qt...

 

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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 2 for 1 in the last period. Stock Price (PO) Share outstanding (QO) Price (P1) Share outstanding (Q1) A $95 100 $100 100 B $45 200 $40 200 $110 200 $120 200 a) Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = O to t = 1). (4points) b) Calculate the market-weighted index of the three stocks for the first period (t = 0 to t = 1). (4 points) c) What must happen to the divisor for the price-weighted index to account for the stock split? (4 points) 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 2 for 1 in the last period. Stock Price (PO) Share outstanding (QO) Price (P1) Share outstanding (Q1) A $95 100 $100 100 B $45 200 $40 200 $110 200 $120 200 a) Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = O to t = 1). (4points) b) Calculate the market-weighted index of the three stocks for the first period (t = 0 to t = 1). (4 points) c) What must happen to the divisor for the price-weighted index to account for the stock split? (4 points)