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Problem:

Assume there are only three stocks in the market: A, B, and C. At time 0, P(A) = $10, P(B) = $20, and P(C) = $10. At time 1, P(A) = $15, P(B) = $30, P(C) = $5. The number of shares outstanding is 1 million for A, 2 million for B, and 2 million for C.

Required:

Question 1: What are the individual stock returns for A, B, and C from time 0 to time 1?

Question 2: What is the return on a price weighted index of these three stocks?

Question 3: What is the return on a price weighted index of these three stocks?

Question 4: What is the return on an equal weighted index of these three stocks?

Question 5: Why the three indexes give different returns?

Question 6: Explain in detail and provide step by step solution.

Explain in detail and provide step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145927

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