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- Problem 5-7 Index Level (LO4, CFA2) You are given the following information concerning two stocks that make up an index. Assume the value-weighted index

- Problem 5-7 Index Level (LO4, CFA2)

You are given the following information concerning two stocks that make up an index. Assume the value-weighted index level was 211.98 at the beginning of the year. What is the index level at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price per Share
Shares Outstanding Beginning of Year End of Year
Kirk, Inc. 34,000 $ 54 $ 61
Picard Co. 32,500 79 85

Index Level = ______

- Problem 5-14 Price-Weighted Indexes (LO4, CFA2)

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 200 $ 70 $ 73 $ 87
Dynamics General 300 51 46 60
International Rockwell 390 80 69 86

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, 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.)

2019 Return = ______%

2020 Return = ______%

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