(a)
Index on the day immediately before the split (on 1 Jan 2017) = (100 + 22 + 45 ) / 3 = 55.666666667
Price of Douglas McDonnel stock just after the split (on 2 Jan 2017) = 100/3 = $33.333333
New divisor for the index = (33.333333 + 22 + 45)) / 55.6666667 = 1.80
(b)
Index on 1 Jan 2017 = 55.6666667
Index on 1 Jan 2018 = (35.39 + 36 + 62) / 1.80 = 74.007076
Rate of return on the index for the year 2017 = {(74.007076 - 55.6666667) / 55.6666667}x100 = 32.95%
QUESTION 4 The following three defense stocks are to be combined into a price-weighted stock index in January 2016 (per...
The following three defense stocks are to be combined into a price-weighted stock index in January 2016 (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, 2017 and that the company enacts the stock split on January 2, 2017. Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 430 $ 108 $ 114 $ 41.08 Dynamics General 535 38 34 48...
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): Suppose that Douglas McDonnell shareholders approve a 3-for-1 stock split on January 1, 2017. Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 545 $ 80 $ 83 $ 98 Dynamics General 460 70 63 77 International Rockwell 190 99 88 91 a. What is the new divisor for...
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 195 $ 97 $ 100 $ 113 Dynamics General 455 27 22 36 International Rockwell 230 56 45 62 a. Calculate the initial value of the index if a price-weighting scheme is used. b. What is the rate of return...
QUESTION 2 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). Assume the index is scaled by a factor of 10 million, that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Douglas McDonnell Dynamics General International Rockwell Shares (millions) 195 455 230 1/1/16...
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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 350 $ 65 $ 69 $ 81...
QUESTION 3 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 1/1/16 $ 64 1/1/17 $ 68 Douglas McDonnell Dynamics General International Rockwell 215 455 250 72 64 1/1/18 $ 82 78 1 06 101 90 a. Calculate the initial value of the index if a price-weighting scheme is used. (Enter your answers rounded to...
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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 425 $ 72 $ 75 $ 92...
Problem 5-14 Price-Weighted Indexes (L04, CFA2) 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) 530 230 330 1/1/16 $ 62 1/1/18 $ 81 Douglas McDonnell Dynamics General International Rockwell - 34 1/1/17 $ 66 28 52 42 63 68 ces a. Calculate the initial value of the index if a price-weighting scheme is...
Problem 5-16 Value-Weighted Indexes (LO4, CFA2) 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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Douglas McDonnell Dynamics General International Rockwell Shares (millions)...
Problem 5-16 Value-Weighted Indexes (LO4, CFA2) 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). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500. Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell 530...