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The following three defense stocks are to be combined into a stock index in January...

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Accounting

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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): Price Shares (millions) 425 530 310 1/1/16 $ 72 Douglas McDonnell Dynamics General International Rockwell 1/1/17 $ 75 43 68 1/1/18 $92 57 79 85 a. Calculate the initial value of the index if a price-weighting scheme is used. 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

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