ADM 3352 Lecture Notes - Stock Fund, Downside Risk, Market Risk

• School: University of Ottawa
• Department: Administration
• Course: ADM 3352
• Professor: Chen Guo

Document Summary

The index at t = 0 is (60 + 80 + 20)/3 = 53. 33. At t = 1, it is (70+70+25)/3 = 55, for a rate of return of. At t=1, it is also 640, so the rate of return is zero. After the splits the index has to remain unchanged so the divisor (which initially was 3) has to be reset. The sum of the three prices after the split is 70, while the index value before splits was 53. 33. therefore. 70/d=53. 33 and the new divisor must be 1. 3125. The index at t = 0 is (90 + 50 + 100)/3 = 80. At t = 1, it is 250/3 = 83. 333, for a rate of return of. 4. 17%: in the absence of a split, stock c would sell for 110, and the index would be 250/3 = 83. 333. After the split, stock c sells at 55.