Exercise $1$

$($a$)$ P is a price$-$weighted index built using the three stocks. Find the return of the index from t $=0$ to

t $=1$ and from t $=1$ to t $=2.$

$($b$)$ Q is a value$-$weighted index built using the three stocks. Without computing it$,$ do you expect the

returns of Q to be equal or di$$erent the one of P$?$ Why?