Consider the three stocks in the following table.Pt represents price at time t, andQt represents shares outstanding at timet. Stock C splits two-for-one in the last period.
| P0 | Q0 | P1 | Q1 | P2 | Q2 |
|---|
| A | 97 | 100 | 102 | 100 | 102 | 100 |
|---|
| B | 57 | 200 | 52 | 200 | 52 | 200 |
|---|
| C | 114 | 200 | 124 | 200 | 62 | 400 |
|---|
a. Calculate the rate of return on aprice-weighted index of the three stocks for the first period(t = 0 to t = 1). (Do not roundintermediate calculations. Round your answer to 2 decimalplaces.)
b. What will be the divisor for theprice-weighted index in year 2? (Do not round intermediatecalculations. Round your answer to 2 decimalplaces.)
c. Calculate the rate of return of theprice-weighted index for the second period (t = 1 tot = 2).
