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The following three defense stocks are to be combined into a stock index in January 2016 (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 2016 (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, 2017. Price Douglas McDonnell Dynamics General International Rockwell Shares (millions) 340 450 410 1/1/16 $103 45 74 1/1/17 $106 39 63 1/1/18 $118 53 79 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.) New divisor b. Calculate the rate of return on the index for the year ending December 31, 2017, if Douglas McDonnell's share price on January 1, 2018, is $39.33 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return %

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