The following three defense stocks are to be combined into a stock index in January 2022 (perhaps a portfolio manager believesthese stocks are an appropriate benchmark for his or her performance). Assume the index is scaled by a factor of 10 million; that is, ifthe total value of all firms in the market is $5 billion, the index would be quoted as 500.Douglas McDonnellDynamics GeneralInternationalRockwellShares (millions)2154551/1/22$ 64Price1/1/231/1/2472. $ 6864$ 827825010190106a. Calculate the initial value of the index if a value-weighting scheme is used.Note: Round your answer to 2 decimal places.Index value49,045.00b. 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 valué should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as apercent rounded to 2 decimal places.2022 return2023 return

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Answered: The following three defense stocks are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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). 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 Shares(millions) 1/1/19 1/1/20 1/1/21 Douglas McDonnell 210 $ 94 $ 97 $ 111 Dynamics General 450 36 31 45 International Rockwell 350 65 54 68 a. Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.) 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.)
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) 430 535 210 2022 return 2023 return a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/22 $ 108 38 67 Price 1/1/23 $ 114 34 56 % % 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. 1/1/24 $ 131 48 70
es 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 a. Calculate the initial value of the index if a value-weighting scheme is used. Note: Round your answer to 2 decimal places. Price 1/1/23 % % $68 64 90 Check my wa 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): Douglas McDonnell Dynamics General Index value Shares (millions) 200 300 390 International Rockwell, a. Calculate the initial value of the index if a price-weighting scheme is used. 2022 return 2023 return 1/1/22 $ 70 51 80 Price 1/1/23 $ 73 46 69 % % 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. 1/1/24 $ 87 60 86
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). Suppose that Douglas McDonnell shareholders approve a 3- for-1 stock split on January 1, 2023. Douglas McDonnell Dynamics General International Rockwell New divisor Shares (millions) 205 450 290 Rate of return a. What is the new divisor for the index? Note: Do not round intermediate calculations. Round your answer to 3 decimal places. 76.000 1/1/22 $ 103 48 77 Price 1/1/23 $ 109 44 66 19.18 % 1/1/24 $123 58 80 b. Calculate the rate of return on the index for the year ending December 31, 2023, if Douglas McDonnell's share price on January 1, 2024, is $38.40 per share. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
es 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) 420 450 250 2022 return 2023 return a. Calculate the initial value of the index if a price-weighting scheme is used. 1/1/22 $ 63 53 82 Price 1/1/23 $ 67 47 71 % % 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. 1/1/24 $ 84 61 87
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) 195 455 230 % Index value 1/1/19 $ 97 27 56 Price 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.) 1/1/20 $100 22 45 1/1/21 $113 36 62 b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020? (Do not round intermediate calculations. Round your answer 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 2019 return 2020 return Shares (millions) 415 225 350 % 1/1/19 $84 23 52 a. Calculate the initial value of the index if a price-weighting scheme is used. % Price 1/1/20 $ 89 16 41 1/1/21 $106 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.) 30 55
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): Price Shares(millions) 1/1/19 1/1/20 1/1/21 Douglas McDonnell 185 $ 69 $ 72 $ 85 Dynamics General 450 47 40 54 International Rockwell 270 76 65 79 a. Calculate the initial value of the index if a price-weighting scheme is used. 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.)
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) 210 450 350 % Index value 1/1/19 $94 36 65 Price 1/1/20 $ 97 31 54 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 $111 45 68 b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Che
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 2.198 Rate of return Shares (millions) 345 450 310 1/1/19 $ 94 66 95 What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 18.70 % Price 1/1/20 $ 97 61 84 1/1/21 $109 75 101 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 $34.50 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 beleves these stocks are an approprlate benchmark for his or her performance): Priom Douglan HeDonnell Dynanicn Ceneral International Roekvell Sharee Imilliona) 355 455 270 1/1/19 $86 55 84 3/1/20 $91 52 1/1/21 $103 66 87 73 a. Calculate the initial value of the index if a price-weighting scheme is used. Index value b. What is the rate of return on this Index for the year ending December 31, 20197 For the year ending December 31, 20207 (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.) 2019 return 2020 retum

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