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%

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 10P
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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%
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