Quiz 4 2010

# Quiz 4 2010 - B What must happen to the divisor for the...

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DePaul University Name______________________________ Winter Quarter, 2010 FINANCE 330 INVESTMENT ANALYSIS QUIZ 4 ANSWERS Consider the three stocks in the above table. P t represents price at time t, and Q t represents shares outstanding at time t. Stock A splits two-for-one at the last period. There were no other changes in the last period. A) Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t=1).
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Unformatted text preview: B) What must happen to the divisor for the price-weighted index in year 2? What happens to the value of the index after the stock split? C) Calculate the first-period rates of return (from t=0 to t=1) on a market-value-weighted index. D) Calculate the rate of return for the second period (t=1 to t=2) on a market-value-weighted index. (5 points)...
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