Business, 18.03.2021 01:40, twinkieslayer
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. The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Price Shares (millions) 1/1/19 1/1/20 1/1/21 Douglas McDonnell 535 $ 89 $ 94 $ 109 Dynamics General 450 70 65 79 International Rockwell 230 99 88 105 a. Compute the rate of return on an equally weighted index of the three defense stocks for the year ending December 31, 2019. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If the index value is set to 100 on January 1, 2019, what will the index value be on January 1, 2020
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In addition to price-weighted and value-weighted indexes, an equally weighted index is one in which...
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