The following three defense stocks are to be combined into a stock index in January...
90.2K
Verified Solution
Link Copied!
Question
Finance
The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance). Suppose that Douglas McDonnell shareholders approve a 2-for-1 stock split on January 1, 2020.
Price
Shares (millions)
1/1/19
1/1/20
1/1/21
Douglas McDonnell
185
$
69
$
72
$
85
Dynamics General
450
47
40
54
International Rockwell
270
76
65
79
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, 2020, if Douglas McDonnells share price on January 1, 2021, is $26.15 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Rate of Return _____ %
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
