QUESTION 13 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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Shares (millions) 185 Douglas McDonnell Dynamics General International Rockwell 1/1/16 $ 69 47 76 1/1/17 $ 72 40 65 1/1/18 $ 85 54 79 450 270 a. Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.) Index Value: b. What is the rate of return on this index for the year ending December 31, 2016? For the year ending December 31, 2017? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 2016 Return: % 2017 Return: % QUESTION 13 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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Shares (millions) 185 Douglas McDonnell Dynamics General International Rockwell 1/1/16 $ 69 47 76 1/1/17 $ 72 40 65 1/1/18 $ 85 54 79 450 270 a. Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.) Index Value: b. What is the rate of return on this index for the year ending December 31, 2016? For the year ending December 31, 2017? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 2016 Return: % 2017 Return: %