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The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are
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. Douglas McDonnell Dynamics General International Rockwell New divisor Shares (millions) 430 535 210 Rate of return 1/1/19 $108 38 67 % Price a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) 1/1/20 $114 34 56 1/1/21 $131 48 70 b. Calculate the rate of return on the index for the year ending December 31, 2020, if Douglas McDonnell's share price on January 1, 2021, is $41.08 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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