The following three defense stocks are to be combined into a stock index in January...
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The following three defense stocks are to be combined into a stock index in January 2010 (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, 2011. Price Shares (millions) 1/1/10 1/1/11 1/1/12 355 $86 $ 91 $103 Douglas McDonnell Dynamics General International Rockwell 455 55 52 66 270 84 73 87 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, 2011, if Douglas McDonnell's share price on January 1, 2012, is $34.33 per share. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Rate of return %
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