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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. Price 1/1/23 1/1/22 $ 303 45 74 Shares (millions) 340 Douglas McDonnell Dynamics General 450 International Rockwell 410 a. Calculate the initial value of the index if a value-weighting scheme is used. Index value $ 106 39 63 1/1/24 $118 53 79 b. What is the rate of return on this index for the year ending December 31, 20227 For the year ending December 31, 20237 Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a 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. Price 1/1/23 1/1/22 $ 303 45 74 Shares (millions) 340 Douglas McDonnell Dynamics General 450 International Rockwell 410 a. Calculate the initial value of the index if a value-weighting scheme is used. Index value $ 106 39 63 1/1/24 $118 53 79 b. What is the rate of return on this index for the year ending December 31, 20227 For the year ending December 31, 20237 Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a rounded to 2 decimal places

Essentials Of Investments
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
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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 Shares (millions) 340 1/1/22 $ 303 2022 return 2023 return Price 1/1/23 $106 450 410 a. Calculate the initial value of the index if a value-weighting scheme is used. Index value 45 74 1/1/24 $ 118 53 79 39 63 b. What is the rate of return on this index for the year ending December 31, 20227 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.
Transcribed Image Text: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 Shares (millions) 340 1/1/22 $ 303 2022 return 2023 return Price 1/1/23 $106 450 410 a. Calculate the initial value of the index if a value-weighting scheme is used. Index value 45 74 1/1/24 $ 118 53 79 39 63 b. What is the rate of return on this index for the year ending December 31, 20227 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.
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