21. A stock market analyst observes the following for the price of two stocks that he owns, one of which is increasing at an exponential rate (geometric) and the other is increasing in a linear fashion (arithmetic). Stock A: Equation: an = 15n+ 143, where an is the value of the stock and n is the number of years. Year Price 1 2 3 4 5 1 Stock B: Equation: a = 24(1.1)”—¹, where an is the value of the stock and n is the number of years. Year Price 2 3 4 $158.00 $173.00 5 $188.00 $203.00 $218.00 $24.00 $26.40 $29.04 $31.94 $35.14 Assuming these stock values continue to increase in the same manner until retirement, which stock option is worth more in 50 years and how much more is this stock worth per sha

Am. 132.

Consider the following information: State   Probability   Stock A   Stock B   Stock C  Boom     0.32         0.09        -0.01        0.01  Bust       0.68         -0.05        0.28        0.03 What is the expected return of a portfolio that has invested $9,981 in Stock A, $6,817 in Stock B, and   $2,123 in Stock C? (Hint: calculate weights of each stock first). Enter the answer with 4 decimals (e.g. 0.1234).

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. A B C Po 82 42 84 00 100 200 200 Divisor P1 87 37 94 01 100 200 200 P2 87 37 47 92 100 200 400 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.) Rate of return I % 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.) D c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t = 2).