Explanation

The correct answer is B (26.67%), which represents the price return for an equal-weighted index. Here's the breakdown:

1. Price Return Calculation for Each Security:

   • Security 1: (18 / 20) - 1 = -10%
   • Security 2: (15 / 10) - 1 = 50%
   • Security 3: (21 / 15) - 1 = 40%

2. Equal-Weighted Index Return: The price return for an equal-weighted index is the average of the individual security returns: $\frac{-10\% + 50\% + 40\%}{3} = 26.67\%$

Why Not Other Options?

• A (20%): This is the price return for a price-weighted index, not an equal-weighted index.
• C (38.33%): This represents the total return (including dividends) for an equal-weighted index, not the price return.