Question

apter 2 Check my work mode: This shows what is correct or incorrect for the work you have completed so far, it does not indicate completion Return to question Consider the three stocks in the following table Pt represents price at time and Ot represents shares outstanding at time Stock splits two for one in the last period 02 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 market value-weighted index Answer is complete but not entirely correct. Rate of 2.500 b. An equally weighted index Answer is complete but not entirely correct. 2.08 % < Prev 7 of 8 Score answer > MacBook Air : : : : : : . . | WERIUTO slo FGHIJKL

Answer 1

A.	Market Value Weighted Index
	Stock	P0	Q0	P1	Q1	P0*Q0	P1*Q1
	A	95	100	100	100	9500	10000
	B	55	200	50	200	11000	10000
	C	110	200	120	200	22000	24000
	Total					42500	44000
	first Period Rate of return=(P1*Q1- P0*Q0)/P0*Q0)
	first Period Rate of return=(44000-42500)/ 42500=1500/42500
	first Period Rate of return=3.53%
B.	Equally weighted Index
	Stock return = (P1-P0)/P0
	Stock return of A= (100-95)/95
	Stock return of A= 5/95 =5.26%
	Stock return of B = (50-55)/55
	Stock return of B = -5/55 = 9.09%
	Stock return of C= (120-110)/ 110
	Stock return of C= 10/110 = 9.09%
	first period rate of return = Sum of all Stock return / number of Stock
	first period rate of return = (5.26% + (-9.09%) + 9.09%)/3
	first period rate of return = 5.26%/3 = 1.75%