Use the following information to answer the next three questions. 1) Find the ra

Question

Use the following information to answer the next three questions.

1) Find the rate of return for an unweighted index from 2013-2014. Round intermediate steps and your final answer to four decimals. Enter your final answer in decimal format

2) Find the rate of return for an equally weighted index from 2014-2015.

.2394

.2464

.2475

.2671

3) Find the percentage return on a value weighted index from 2013-2014.

-.0647

-.0858

-.0411

None of the above

Price Shares
(millions) 1/1/13 1/1/14 1/1/15   Douglas McDonnell 200    $ 70    $ 73    $ 87      Dynamics General 300    51    46    60      International Rockwell 390    80    69    86   

Explanation / Answer

1) the rate of return for an unweighted index from 2013-2014 =

= (73 - 70 / 70) + (46 - 51 / 51) + ( 69 - 80 / 80) = -0.1927

2) the rate of return for an equally weighted index from 2014-2015 =

= [ (87-73 / 73) 200 + (60-46 / 46) 300 + (86 - 69 / 69) 390 ] / (200+300+390) = 0.2537 (none of above)

3)the percentage return on a value weighted index from 2013-2014 =

=[ (73 - 70 / 70) 200 + (46 - 51 / 51) 300 + ( 69 - 80 / 80) 390] / 890 = [ 8.5714 - 29.4117 - 53.625 ] / 890 = -0.08367 (none of above)

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