Question
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): |
Price | ||||||||||
Shares (millions) | 1/1/13 | 1/1/14 | 1/1/15 | |||||||
Douglas McDonnell | 415 | $ | 84 | $ | 89 | $ | 106 | |||
Dynamics General | 225 | 23 | 20 | 34 | ||||||
International Rockwell | 350 | 52 | 41 | 55 |
a. | Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2013. (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
Index return | % |
b. | If the index value is set to 100 on January 1, 2013, what will the index value be on January 1, 2014? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Index value |
c. | What is the rate of return on the index for 2014? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
Index return | % |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started