am. 50. In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value iscomputed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently usedby 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 managerbelieves these stocks are an appropriate benchmark for his or her performance):Douglas McDonnellDynamics GeneralInternationalRockwellShares (millions)Index return195455230Index value1/1/22$ 972756a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31,2022.%Price1/1/23$ 1002245Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answeras a percent rounded to 2 decimal places.1/1/24$1133662b. 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.

A stock index is a measure that helps in measuring the performance of stock markets all over the…

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) Index value 195 455 230 % 1/1/22 $ 97 27 56 Price 1/1/23 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. $ 100 22 45 1/1/24 $ 113 36 62 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.

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) Index value 195 455 230 % 1/1/22 $ 97 27 56 Price 1/1/23 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. $ 100 22 45 1/1/24 $ 113 36 62 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.

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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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 Shares (millions) 1/1/22 540 455 290 $ 62 49 78 Price 1/1/23 $ 66 43 67 1/1/24 $ 81 57 81 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,…
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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 2019 (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) 530 230 330 1/1/19 $ 62 34 63 Index value Price 1/1/20 $ 66 28 52 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2019. (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.) 1/1/21 $.81 42 68 b. If the index value is set to 100 on January…
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 2010 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Price Shares (millions) 1/1/10 1/1/11 1/1/12 Douglas 360 $65 $69 $ 83 McDonnell Dynamics 450 52 46 60 General International Rockwell 170 81 70 86 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2010. (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Index return % b. If the index value is set to 100 on January 1, 2010, what will the index value be…
The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Price Shares(millions) 1/1/19 1/1/20 1/1/21 Douglas McDonnell 185 $ 69 $ 72 $ 85 Dynamics General 450 47 40 54 International Rockwell 270 76 65 79 a. Calculate the initial value of the index if a price-weighting scheme is used. b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? (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.)
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 value Shares (millions) 430 535 210 2022 return 2023 return a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/22 $ 108 38 67 Price 1/1/23 $ 114 34 56 % % 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. 1/1/24 $ 131 48 70
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 Index value Shares (millions) 200 300 390 International Rockwell, a. Calculate the initial value of the index if a price-weighting scheme is used. 2022 return 2023 return 1/1/22 $ 70 51 80 Price 1/1/23 $ 73 46 69 % % 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. 1/1/24 $ 87 60 86
The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): [[,,Price], [, Shares,,,], [Douglas McDonnell, 210, 94,97,111
The following three defense stocks are to be combined into a stock index in January 2019 (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) 195 455 230 % Index value 1/1/19 $ 97 27 56 Price a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2019. (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.) 1/1/20 $100 22 45 1/1/21 $113 36 62 b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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). Suppose that Douglas McDonnell shareholders approve a 3- for-1 stock split on January 1, 2023. Douglas McDonnell Dynamics General International Rockwell New divisor Shares (millions) 205 450 290 Rate of return a. What is the new divisor for the index? Note: Do not round intermediate calculations. Round your answer to 3 decimal places. 76.000 1/1/22 $ 103 48 77 Price 1/1/23 $ 109 44 66 19.18 % 1/1/24 $123 58 80 b. Calculate the rate of return on the index for the year ending December 31, 2023, if Douglas McDonnell's share price on January 1, 2024, is $38.40 per share. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Suppose that a hedge fund uses the value factor strategy and rebalances the portfolio once a year at the end of April 2022.The investment universe corresponds to stocks in the S&P 500. In this case, is the following statement true or false: "When forming the value factor strategy in April 2022, we should compute the P/B ratio of S&P500 firms based on historical data from December 2021". O True O False
The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Douglas McDonnell Dynamics General International Rockwell Index value 2019 return 2020 return Shares (millions) 415 225 350 % 1/1/19 $84 23 52 a. Calculate the initial value of the index if a price-weighting scheme is used. % Price 1/1/20 $ 89 16 41 1/1/21 $106 b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? (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.) 30 55

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