LY ANSWER QUESTION 2) 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 two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 90 100 95 100 95 100 B 50 200 45 200 45 200 C 100 200 110 200 55 400 1. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). 2. What must happen to the divisor for the price-weighted index in year 2? 3. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).

LY ANSWER QUESTION 2) 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 two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 90 100 95 100 95 100 B 50 200 45 200 45 200 C 100 200 110 200 55 400 1. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). 2. What must happen to the divisor for the price-weighted index in year 2? 3. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 3Q

See similar textbooks

Similar questions

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Stock C splits two-for-one in the last period. (LO 2-2) A B C Po 90 50 100 Qo 100 200 200 P₁ 95 45 110 Q₁ 100 200 200 P₂ 95 45 55 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). b. What must happen to the divisor for the price-weighted index in year 2? c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t=2). Q₂ 100 200 400
For the next question, consider the two stocks, A and B, in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. P0 Q0 P1 Q1 A 50 100 45 100 B 30 200 34 200 Calculate the rate of return on a price-weighted index of the two stocks for between t = 0 and t = 1. Assume the divisor value is 2. Enter your answer as a decimal, rounded to four decimal places (e.g, 0.0123).
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 two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 87 100 92 100 92 100 B 47 200 42 200 42 200 C 94 200 104 200 52 400 Required: 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.) b. What will be the 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 of the price-weighted index for the second period (t = 1 to t = 2).
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 two for one in the last period. P0 Q0 P1 Q1 P2 Q2 A 110 500 115 500 115 500 B 90 600 85 600 85 600 C 80 600 100 600 50 1,200 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.) 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).
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 two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 84 100 89 100 89 100 B 44 200 39 200 39 200 C 88 200 98 200 49 400 Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round intermediate calculations. Round your answers to 2 decimal places.)a. A market value–weighted index b. An equally weighted index
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 two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 94 100 99 100 99 100 B 54 200 49 200 49 200 C 108 200 118 200 59 400 Required: Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round intermediate calculations. Round your answers to 2 decimal places.)a. A market value–weighted index b. An equally weighted index
3.Consider the three stocks in the following table. P t represents price at time t, and Q1 represents shares outstanding at time t. Stock C splits two for one in the last period. P0 Q0 P1 Q1 P2 Q2 A 90 100 96 100 95 100 B 50 200 45 200 45 200 C 100 200 110 200 55 400 a.Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1). b.What must happen to the divisor for the price-weighted index in year 2? Calculate the rate of return for the second period (t=1 to t=2)
Consider the three stocks in the following table. Pt represents price at time t, Qt represents shares outstanding at time t. Stock C splits two for one in the second period from t=1 to t=2. Calculate the rate of return on a price-weighted index consisting of the three stocks for the first period from t=0 to t=1. Answer in percentage. Stock P0 Q0 P1 Q1 P2 Q2 A 70 475 75 475 75 475 B 45 850 40 850 40 850 C 50 300 60 300 30 600 a. 0.00% b. 2.49% c. 6.06% d. 8.95% e. 1.30%
Consider the three stocks in the following table. Pt represents price at time t, Qt represents shares outstanding at time t. Stock C splits two for one in the second period from t=1 to t=2. Calculate the rate of return on a price-weighted index consisting of the three stocks for the first period from t=0 to t=1. Answer in percentage. Answer options: 0.00% 2.49% 6.06% 8.95% 1.30%
Suppose that you would like to create composite indexes from three stocks: stk1, stk2, stk3. Their stock prices (Pt) and total shares outstanding (Qt) from day 0 to day 1 are shown as follows: stk3 splits two-for-one in day 1. P0 Q0 P1 Q1 stk1 40 100 50 100 stk2 50 200 50 200 stk3 60 150 50 300 Which answer is the closest value to the rate of return on an equal-weighted index of the three stocks? A. 20% B. 25% C. 30% D. 35%
Suppose that you would like to create composite indexes from three stocks: stk1, stk2, stk3. Their stock prices (Pt) and total shares outstanding (Qt) from day 0 to day 1 are shown as follows: stk3 splits two-for-one in day 1. P0 Q0 P1 Q1 stk1 40 100 50 100 stk2 50 200 50 200 stk3 60 150 50 300 Which answer is the closest value to the rate of return on a value-weighted index of the three stocks? A. 20% B. 25% C. 30% D. 35%