In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance.

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	545		$	80		$	83		$	98
Dynamics General	460			70			63			77
International Rockwell	190			99			88			102

a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2019.

b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020?

c. What is the rate of return on the index for 2020?