Defense stocks are to be combined into a stock index

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The following three defense stocks are to be combined into a stock index in January 2013 (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, 2014. Price Shares (millions) 1/1/13 1/1/14 1/1/15 Douglas McDonnell 425 $ 72 $ 75 $ 92 Dynamics General 530 50 43 57 International Rockwell 310 79 68 85 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, 2014, if Douglas McDonnell’s share price on January 1, 2015, is $26.87 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Rate of return %

Reference no: EM131013196

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Defense stocks are to be combined into a stock index : The following three defense stocks are to be combined into a stock index in January 2013 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Suppose that Douglas McDonnell shareholders approve ..

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