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): Douglas McDonnell Dynamics General International Rockwell Index value Shares (millions) 340 450 410 2022 return 2023 return 1/1/22 % % $ 103 45 74 Price 1/1/23 $ 106 39 63 a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/24 $118. 53 79 b. What is the rate of return on this index for the year ending December 31, 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): Douglas McDonnell Dynamics General International Rockwell Index value Shares (millions) 340 450 410 2022 return 2023 return 1/1/22 % % $ 103 45 74 Price 1/1/23 $ 106 39 63 a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/24 $118. 53 79 b. What is the rate of return on this index for the year ending December 31, 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
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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):
Douglas McDonnell
Dynamics General
International Rockwell
Index value
Shares
(millions) 1/1/22
340
$ 103
450
45
410
74
2022 return
2023 return
Price
1/1/23
%
%
$ 106
39
63
a. Calculate the initial value of the index if a price-weighting scheme is used.
1/1/24
$118.
b. What is the rate of return on this index for the year ending December 31, 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.
53
79
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