k ces 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) 425 530 310 % 1/1/19 $ 72 50 79 Price 1/1/20 $ 75 43 68 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 $ 92 57 85 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.)
k ces 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) 425 530 310 % 1/1/19 $ 72 50 79 Price 1/1/20 $ 75 43 68 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 $ 92 57 85 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.)
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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Transcribed Image Text:k
ces
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)
425
530
310
%
1/1/19
$ 72
50
79
Price
1/1/20
$ 75
43
68
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
$ 92
57
85
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.)
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