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) 350 450 210 Rate of return 1/1/19 $ 65 25 54 % Price 1/1/20 $69 19 43 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/21 $81 33 57 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 $25.02 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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) 350 450 210 Rate of return 1/1/19 $ 65 25 54 % Price 1/1/20 $69 19 43 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/21 $81 33 57 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 $25.02 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded 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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