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). Suppose that Douglas McDonnell shareholders approve a 3-for-1 stock split on January 1, 2020.

		Price
	Shares (millions)		1/1/19			1/1/20			1/1/21
Douglas McDonnell	205		$	103		$	109		$	123
Dynamics General	450			48			44			58
International Rockwell	290			77			66			80

a. What is the new divisor for the index?

b. Calculate the rate of return on the index for the year ending December 31, 2020, if Douglas McDonnells share price on January 1, 2021, is $38.40 per share.