Consider the data for 3 stocks T=0. T=1 Price. Shares outst. Price A. 10. 200. 20 B. 20. 500. 20 C. 30. 600. 20 What is the single period return on the price weighted index constructed from the three stocks if stocks A and B were to split 2 for 1 and 4 for 1 respectively after period 0? Using a divisor of 3 for the pre split calculation A -12.50% B -13.33% C 0.00% D -10.00%

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 10PROB
icon
Related questions
Question

9

Consider the data for 3 stocks

T=0. T=1

Price. Shares outst. Price

A. 10. 200. 20

B. 20. 500. 20

C. 30. 600. 20

What is the single period return on the price weighted index constructed from the three stocks if stocks A and B were to split 2 for 1 and 4 for 1 respectively after period 0? Using a divisor of 3 for the pre split calculation

A -12.50%

B -13.33%

C 0.00%

D -10.00%

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Investment in Stocks
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
EBK CFIN
EBK CFIN
Finance
ISBN:
9781337671743
Author:
BESLEY
Publisher:
CENGAGE LEARNING - CONSIGNMENT