Question: consider the three stocks in the following table pt represents...
Question details
Consider the three stocks in the following table. P(t) represents price at time t, and Q (t) represents share outstanding at time t. Stock C splits two for one in the last period.
P(0) 
Q(0) 
P(1) 
Q(1) 
P(2) 
Q(2) 

A 
90 
100 
95 
100 
95 
100 
B 
50 
200 
45 
200 
45 
200 
C 
100 
200 
110 
200 
55 
400 

First, calculate the price weighted indexes at t=0 and t=1. Based on the two numbers calculate the rate of return.

What must happen to the divisor for the priceweighted index in year 2?

Calculate the price weighted index at t=2. Based on the index number at t=1 and t=2, calculate the rate of return.