Use the following information to answer the next three questions. 1) Find the ra
ID: 2732469 • Letter: U
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)