Financial researchers to measure portfolio performance

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Reference no: EM131840023

In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance. Suppose 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) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 540 $ 62 $ 77 $ 81 Dynamics General 455 49 53 57 International Rockwell 290 78 72 81 What is the percentage rate of return on this index for the year ending December 31, 2016?

Reference no: EM131840023

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