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The following three defense stocks are to be combined into a stock index in January 2010 (perhaps a portfolio manager believes these stocks are
The following three defense stocks are to be combined into a stock index in January 2010 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Price Shares (millions) 1/1/10 1/1/11 1/1/12 Douglas 355 $86 $ 91 $103 McDonnell Dynamics 455 55 52 66 General International 270 84 73 87 Rockwell 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, 2010? For the year ending December 31, 2011? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) 2010 return 2011 return de de % %
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