a. Calculate the initial value of the index if a value-weighting scheme is used. Note: Round your answer to 2 decimal places. Index value b. What is the rate of return on this index for the year ending December 31, 2022? For the year ending Decembe 31, 2023? Note: 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. 2022 return 2023 return % %
a. Calculate the initial value of the index if a value-weighting scheme is used. Note: Round your answer to 2 decimal places. Index value b. What is the rate of return on this index for the year ending December 31, 2022? For the year ending Decembe 31, 2023? Note: 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. 2022 return 2023 return % %
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
Bhupatbhai
Transcribed Image Text:The following three defense stocks are to be combined into a stock index in January 2022 (perhaps a portfolio
manager believes these stocks are an appropriate benchmark for his or her performance). Assume the index is
scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be
quoted as 500.
Shares (millions)
1/1/22
Price
1/1/23
1/1/24
Douglas McDonnell
350
Dynamics General
450
$ 65
25
$ 69
19
$ 81
33
International
210
54
43
Rockwell
57
a. Calculate the initial value of the index if a value-weighting scheme is used.
Note: Round your answer to 2 decimal places.
Index value
b. What is the rate of return on this index for the year ending December 31, 2022? For the year ending December
31, 2023?
Note: 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.
2022 return
2023 return
%
%
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