Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following three defense stocks are to be combined into a stock index in January 2 0 1 6 ( perhaps a portfolio manager believes

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.
\table[[,,Price],[,Shares,,,,],[(millions),11?16,11?17,11?18,,],[Douglas McDonnell,545,$80,$83,$98,],[Dynamics General,460,70,63,77,],[International Rockwell,190,99,88,91,]]
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 $30.04 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Rate of return
%
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions