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 value 67 2019 return 2020 return Shares (millions) 540 455 290 1/1/19 $ 62 49 78 a. Calculate the initial value of the index if a price-weighting scheme is used. -6.47 % 23.94% Price 1/1/20 $ 66 43 67 1/1/21 $ 81 57 81 b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? 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.)
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 value 67 2019 return 2020 return Shares (millions) 540 455 290 1/1/19 $ 62 49 78 a. Calculate the initial value of the index if a price-weighting scheme is used. -6.47 % 23.94% Price 1/1/20 $ 66 43 67 1/1/21 $ 81 57 81 b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? 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.)
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
Related questions
Question
vi.3
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):
Douglas McDonnell
Dynamics General
International Rockwell
Index value
67
2019 return
2020 return
Shares
(millions)
540
455
290
-6.47 %
23.94 %
1/1/19
$ 62
49
78
a. Calculate the initial value of the index if a price-weighting scheme is used.
Price
1/1/20
$ 66
43
67
1/1/21
$ 81
57
81
b. What is the rate of return on this index for the year ending December 31, 2019? For the year ending December 31, 2020? (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.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education