a. Calculate the initial value of the index if a price-weighting scheme is used. Indes value b. What is the rate of return on this Index for the year ending December 31, 20197 For the year ending December 31, 20207 (A negative value should be Indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

a. Calculate the initial value of the index if a price-weighting scheme is used. Indes value b. What is the rate of return on this Index for the year ending December 31, 20197 For the year ending December 31, 20207 (A negative value should be Indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager beleves these
stocks are an approprlate benchmark for his or her performance):
Priom
Douglan HeDonnell
Dynanicn Ceneral
International Roekvell
Sharee
Imilliona)
355
455
270
1/1/19
$86
55
84
3/1/20
$91
52
1/1/21
$103
66
87
73
a. Calculate the initial value of the index if a price-weighting scheme is used.
Index value
b. What is the rate of return on this Index for the year ending December 31, 20197 For the year ending December 31, 20207 (A
negative value should be Indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places.)
2019 return
2020 retum

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