Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 %
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