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Chapter 5 Saved Help Save & Exit S Check my w 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) 195 Douglas McDonnell Dynamics General International Rockwell 455 230 1/1/16 $ 97 27 56 1/1/17 $100 22 45 1/1/18 $113 36 62 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 % You are given the following information concerning two stocks that make up an Index Assume that you want to reindex with the index value at the beginning of the year equal to 100. What is the index level at the e the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per Share Beginning End of of Year Year $ 39 $43 74 79 Shares Outstanding 32,000 31,000 Kirk, Inc. Picard co. Answer is complete but not entirely correct. Index level 92.01 9 Next >

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