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) 185 Rate of return 450 270 % 1/1/19 $69 47 76 Price 1/1/20 $72 40 65 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/21 $85 54 79 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 $26.15 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) 185 Rate of return 450 270 % 1/1/19 $69 47 76 Price 1/1/20 $72 40 65 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/21 $85 54 79 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 $26.15 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter10: The Cost Of Capital
Section: Chapter Questions
Problem 21SP: CALCULATING THE WACC Here is the condensed 2019 balance sheet for Skye Computer Company (in...
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Question
![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)
185
Rate of return
450
270
%
1/1/19
$ 69
47
76
Price
a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal
places.)
1/1/20
$72
40
65
1/1/21
$ 85
54
79
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 $26.15 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to
2 decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdd992054-0cd7-4ec0-9404-ea73262018d8%2F89944fb7-7881-498b-ad02-af184c84db8e%2Fzcfmla_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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)
185
Rate of return
450
270
%
1/1/19
$ 69
47
76
Price
a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal
places.)
1/1/20
$72
40
65
1/1/21
$ 85
54
79
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 $26.15 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to
2 decimal places.)
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