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The following three defense stocks are to be combined into a stock index in January...

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Finance

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). Suppose that Douglas McDonnell shareholders approve a 2-for-1 stock split on January 1, 2020.

Price
Shares (millions) 1/1/19 1/1/20 1/1/21
Douglas McDonnell 185 $ 69 $ 72 $ 85
Dynamics General 450 47 40 54
International Rockwell 270 76 65 79

a. What is the new divisor for the index? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

New Divisor ____

b. Calculate the rate of return on the index for the year ending December 31, 2020, if Douglas McDonnells share price on January 1, 2021, is $26.15 per share. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of Return _____ %

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