#10

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 . 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.)