Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t.
P0 Q0 P1 Q1
A 90 300 100 300
B 50 200 40 200
C 100 200 112 200
a. Calculate the rate of return on a price-weighted index of the three stocks for the period t=0 to t=1.
b. Calculate the rate of return on a market value-weighted index of the three stocks for the period t=0 to t=1.