Problem 5-16 Value-Weighted Indexes (LO4, CFA2)The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes thesestocks are an appropriate benchmark for his or her performance). Assume the index is scaled by a factor of 10 million; that is, if thetotal value of all firms in the market is $5 billion, the index would be quoted as 500.Douglas McDonnellDynamics GeneralInternational RockwellIndex valueShares(millions)2104503502019 return2020 return1/1/19$943665%%Pricea. Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.)1/1/20$ 9731541/1/21$1114568b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? (Anegative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percentrounded to 2 decimal places.)

Index:It measures the basket of securities price performance by applying a standard metric.Such…

Answered: Problem 5-16 Value-Weighted Indexes…

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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The following three defense stocks are to be combined into a stock index in January 2022 (perhaps a portfolio manager belleves 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) 1/1/22 Rate of return 340 458 % 45 Price 1/1/23 a. What is the new divisor for the index? Note: Do not round intermediate calculations. Round your answer to 3 decimal places. $ 106 39 63 1/1/24 $ 118 53 79 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 $39.33 per share. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
#19 At December 31, 2021, Atlanta Company has an equity portfolio valued at $160,000. Its cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of $8,000, which of the following journal entries is required at December 31, 2021? Question 19 options: a Unrealized Holding Gain or Loss-Income 28,000 Fair Value Adjustment 28,000 b Fair Value Adjustment 20,000 Unrealized Holding Gain or Loss-Income 20,000 c Unrealized Holding Gain or Loss-Income 20,000 Fair Value Adjustment 20,000 d Fair Value Adjustment 28,000 Unrealized Holding Gain or Loss-Income 28,000
es 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) 420 450 250 2022 return 2023 return a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/22 $ 63 53 82 Price 1/1/23 $ 67 47 71 % % 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 $ 84 61 87
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). Suppose that Douglas McDonnell shareholders approve a 2-for-1 stock split on January 1, 2020. Douglas McDonnell Dynamics General International Rockwell New divisor Shares (millions) 180 325 370 Rate of return 1/1/19 $ 60 68 97 Price 1/1/20 $ 64 64 86 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/21 $77 78 100 b. Calculate the rate of return on the index for the year ending December 31, 2020, if Douglas McDonnell's share price on January 1, 2021, is $23.42 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Check my work Problem 5-16 Value-Weighted Indexes (LO4, CFA2) 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. Douglas McDonnell Dynamics General International Rockwell Shares (millions) 1/1/22 Price 1/1/23 1/1/24 535 450 230 $ 89 70 99 $ 94 65 88 $ 109 79 105 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…
Question 14?
Risk A1 Q2-1 Question 2. Binomial Model and Option Pricing The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected to go up by 10 percent or down by 5 percent in each of the following two months (Month 1 and Month 2). XYZ Inc. is also expected to pay a dividend yield of 2 percent at the end of Month 1. The risk-free rate is 0.5 percent per month. What is the value of an American call option on XYZ shares, with an exercise price of $125 and two months to expiration? Use the binomial model to obtain the answer.
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Consider 2 stocks in the following table. We create a stock index of companies that make stuff for Spring Break. stocks PO Q0 P1 Q1 ABC, Inc. $ 370p0 1200q0 $400p1 1200q1 XYZ, Inc. $650p0 250q0 $620p 1 250q1 What is the return on a equal - weighted index of these two stocks in percent to 2 decimal places
Problem 14-03 What should be the prices of the following preferred stocks if comparable securities yield 8 percent? Use Appendix B and Appendix D to answer the questions. Round your answers to the nearest cent. MN, Inc., $10 preferred ($120 par) $ CH, Inc., $10 preferred ($120 par) with mandatory retirement after 13 years $ What should be the prices of the following preferred stocks if comparable securities yield 10 percent? Round your answers to the nearest cent. MN, Inc., $10 preferred ($120 par) $ CH, Inc., $10 preferred ($120 par) with mandatory retirement after 13 years $ In which case did the price of the stock change? As with the valuation of bonds, an increase in interest rates causes the value of preferred stock to . In which case was the price more volatile? While the prices of both preferred stocks , the price of the was more volatile.
Question 1 The following are the monthly rates of returns for two stocks, Stock A and Stock B over 2022. Month 1 2 3 4 5 6 7 8 9 10 11 12 Stock A 2.52% -3.2% 0.54% 1.32% 2.56% 1.10% 1.85% 0.58% 1.98% 0.05% 1.15% 2.23% Stock B 1.37% Page 3 of 5 1.58% 0.98% -0.78% 0.98% 1.35% -2.04% 0.87% 2.09% -0.07% 1.78% 0.63% (a) What is the average monthly rate of return for each stock? What is the standard deviation of returns for each stock? (b) Calculate the covariance between the rates of return. Calculate the correlation coefficient between the rates of return. ortfolio Analysis (c) Comment on the diversification benefits of constructing a portfolio of these two stocks.
Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁

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