Consider the three stocks in the following table. Pt represents price at time t, and represents shares outstanding at time t. Stock C splits two for one in the last period. A B с P₁ Q1 80 85 250 250 30 800 25 800 65 800 80 Po Rate of return P₂ New divisor a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 85 25 800 40 1,600 Rate of return Q₂ % 250 800 b. Calculate the new divisor for the price-weighted index in year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return for the second period (t=1 to t=2). (Round your answer to 2 decimal places.) %

Consider the three stocks in the following table. Pt represents price at time t, and represents shares outstanding at time t. Stock C splits two for one in the last period. A B с P₁ Q1 80 85 250 250 30 800 25 800 65 800 80 Po Rate of return P₂ New divisor a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 85 25 800 40 1,600 Rate of return Q₂ % 250 800 b. Calculate the new divisor for the price-weighted index in year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return for the second period (t=1 to t=2). (Round your answer to 2 decimal places.) %

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 2E

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