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) a Calculate the initial value of the index if a price weighting scheme is used b What is the r...

a 1116 Index value 103 45 74 3 7400 b ...

Suppose the following three defense stocks are to be combined into a stock index in January 2016

Question:

Suppose the following three defense are to be combined into a stock index in January 2016 (perhaps a manager believes these are an appropriate benchmark for his or her performance):

Price Shares (millions) 1/1/16 1/1/17 1/1/18 Douglas McDonnell $103 $106 $118 340 45 Dynamics General International Rock

a. Calculate the initial value of the index if a price-weighting scheme is used.
b. What is the rate of return on this index for the year ending December 31, 2016? For the year ending December 31, 2017?

Stocks
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A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...