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 Index value Shares (millions) 215 455 250 2022 return 2023 return 1/1/22 $64 72 101 Price 1/1/23 a. Calculate the initial value of the index if a value-weighting scheme is used. Note: Round your answer to 2 decimal places. $68 64 90 1/1/24 $82 78 106 b. What is the rate of return on this index for the year ending December 3 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.

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 Index value Shares (millions) 215 455 250 2022 return 2023 return 1/1/22 $64 72 101 Price 1/1/23 a. Calculate the initial value of the index if a value-weighting scheme is used. Note: Round your answer to 2 decimal places. $68 64 90 1/1/24 $82 78 106 b. What is the rate of return on this index for the year ending December 3 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.

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 value of the shares in the S&P 500 index is $12,270B. Apple Inc. is the largest company in the index-it is worth $552.158. If you want to build a portfolio that earns the same return as the S&P 500, what is the portfolio weight on Apple? O 4.5% O 3.5% O 5.5% O 6.5%
Demonstrate the impact of different values on a market value weighted stock index with a hypothetical example considering three stocks (stock A, B and C), no. of shares and price for base year 2020 and for the year 2021 with two different cases Case A and Case B ( base year index value as 100)
In the beginning of January 2023 you want to estimate the value of a stock. On December 31 2022 the price of the stock was $63.5 and you believe that the annual dividend growth rate and stock price growth rate will be 7% for the years 2023, 2024 and 2025. The dividend of 2022 will be paid in 2023 and will be S 1.48. The discount rate is 11.5%. Calculate the price of the stock and say if it is over or undervalued
Ralph is constructing a price-weighted index. On March 1, 2XX1, he has the following stocks in the index: Company Share price # shares outstanding Walmart $42.6 26,000 Kmart $18.76 19,000 Venture $55.11 63,000 Macy’s $39.61 45,000 What is the price-weighted index on March 1, 2XX1? (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.167))
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.)
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Assume your portfolio consists of 50% of a stock with a beta of 1.703 and 50% of a stock with a beta of 0.918. For each 1 dollar of your portfolio, how much SP500 index should you short? (enter number only)
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
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Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So. Is $100, and a call option expiring in one year has an exercise price, X, of $100 and is selling at a price, Co. 01 S10. With $10,000 to invest, you are considering three alternatives. Invest all $10,000 in the stock, buying 100 shares. Invest all $10,000 in 1,000 options (10 contracts). Buy 100 options (one contract) for $1,000, and invest the remaining $9,000 in a money market fund paying 4% annual interest. What is your rate of retum for each alternative for the following four stock prices in one year?
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
k ces an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance. 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 return Shares (millions) 425 530 310 % 1/1/19 $ 72 50 79 Price 1/1/20 $ 75 43 68 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2019. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) 1/1/21 $ 92 57 85 b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020? (Do…

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