Question: QUESTION 12 25 points Save Answer The following three defense stocks are to be combined into a price-weighted stock index in January 2016 (perhaps a

QUESTION 12 25 points Save Answer The following three defense stocks

QUESTION 12 25 points Save Answer 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 Douglas McDonnell Dynamics General International Rockwell Shares (millions) 205 450 290 1/1/16 $103 48 77 1/1/17 $109 44 66 1/1/18 $30.40 58 80 a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 2 decimal places.) New Divisor: 1 b. Calculate the rate of return on the index for the year of 2017, (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of Return: %

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