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). Suppose that Douglas McDonnell shareholders approve a 2-for-1stock split on January 1, 2020.Douglas McDonnellDynamics GeneralInternational RockwellNew divisorShares(millions)180325370Rate of return1/1/19$ 606897Price1/1/20$ 646486a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.)1/1/21$7778100b. 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.)

Price-Weighted Index:In the price-weighted index, each security is weighted by the relevant price…

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 Shares (millions) 180 325 370 New divisor 1/1/19 $ 60 68 97 Price 1/1/20 $ 64 64 86 1/1/21 $77 78 100 6. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 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.)

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 Shares (millions) 180 325 370 New divisor 1/1/19 $ 60 68 97 Price 1/1/20 $ 64 64 86 1/1/21 $77 78 100 6. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 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.)

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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