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): 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.)
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 following three defense stocks are to be combined into a stock index in January 2019 (perhaps a
| 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
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