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a)

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a). Initial value of index (using price-weighted scheme) = sum of price per share of all stocks/number of stocks

= (103+45+74)/3 = 74

b). Index value as of 1/1/20 = (106+39+63)/3 = 69.33

2019 return = (2020 value - 2019 value)/2019 value = (69.33-74)/74 = -6.31%

Index value as of 1/1/21 = (118+53+79)/3 = 83.33

2020 return = (2021 value - 2020 value)/2020 value = (83.33-69.33)/69.33 = 20.19%