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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500.

	Price
	Shares (millions)		1/1/13			1/1/14			1/1/15
Douglas McDonnell	215		$	64		$	68		$	82
Dynamics General	455			72			64			78
International Rockwell	250			101			90			106

a.	Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.)

Index value

b.

What is the rate of return on this index for the year ending December 31, 2013? For the year ending December 31, 2014? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

2013 return	%
2014 return	%