Homework Help is Here – Start Your Trial Now!
Business
Finance
a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2022. Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Index return b. If the index value is set to 100 on January 1, 2022, what will the index value be on January 1, 2023? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Index value c. What is the rate of return on the index for 2023? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decin Index return

a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2022. Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Index return b. If the index value is set to 100 on January 1, 2022, what will the index value be on January 1, 2023? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Index value c. What is the rate of return on the index for 2023? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decin Index return

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

answer in text form please (without image)

In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance. 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): Douglas McDonnell Dynamics General International Rockwell Index return Shares (millions) 350 450 210 Index value % Index return 1/1/22 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2022. Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. $ 65 = 25 54 % Price 1/1/23 $69 b. If the index value is set to 100 on January 1, 2022, what will the index value be on January 1, 2023? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 19 43 1/1/24 $ 81 33 57 c. What is the rate of return on the index for 2023? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Transcribed Image Text:In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance. 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): Douglas McDonnell Dynamics General International Rockwell Index return Shares (millions) 350 450 210 Index value % Index return 1/1/22 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2022. Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. $ 65 = 25 54 % Price 1/1/23 $69 b. If the index value is set to 100 on January 1, 2022, what will the index value be on January 1, 2023? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 19 43 1/1/24 $ 81 33 57 c. What is the rate of return on the index for 2023? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 5 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Stock Indices
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS