The following three defense stocks are to be combined into a 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 7-for-1 stock split on January 1, 2017.
Price
Shares (millions) 1/1/16 1/1/17 1/1/18
Douglas McDonnell 530 $62 $66 $81
Dynamics General 230 34 28 42
International Rockwell 330 63 52 68
What is the new divisor for the index?
