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The following three defense stocks are to be combined into a stock index in January 2013 (perhaps a portfolio manager believes these stocks are an

The following three defense stocks are to be combined into a stock index in January 2013 (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, 2014. Price Shares (millions) 1/1/13 1/1/14 1/1/15 Douglas McDonnell 355 $ 86 $ 91 $ 103 Dynamics General 455 55 52 66 International Rockwell 270 84 73 87 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) New divisor b. Calculate the rate of return on the index for the year ending December 31, 2014, if Douglas McDonnells share price on January 1, 2015, is $32.40 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Rate of return %

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