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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 an

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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 an appropriate benchmark for his or her performance): Price Shares (millions) 1/1/10 1/1/11 1/1/12 200 $ 70 $ 73 $ 87 Douglas McDonnell Dynamics General International Rockwell 300 51 46 60 390 80 69 86 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 % %

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