1. Use the Excel file below for stock closing prices of Amazon and Nasdaq. AMZN and nasdaq closing prices.xlsx Download AMZN and nasdaq closing prices.xlsx

(1) Find the monthly return of Amazon and Nasdaq.

(2) Run a liner regression to estimate beta of Amazon.

(3) Use Corrl (Amazon return, Nasdaq return) x STDEV(Standard deviation of Amazon return)/ STDEV (standard deviation of Nasdaq return) to find beta of Amazon.

(4) Use the security market line or capital asset pricing model to find the required rate of return of Amazon, assuming market return is 12% and risk free rate is 3%.

2. Assume a stock that has a payout ratio of 30%, a current dividend of $2, a return on investment of 12%, and a beta of 1.45. Its dividends are assumed to grow at a constant rate. Assume market return of 12% and risk-free rate of 3%.

(1) Find the growth rate.

(2) Estimate the expected future dividends for the next 50 years.

(3) Find the require rate of return.

(4) Find the present value of expected future dividends and the sum of all.

(5) Use the constant growth rate model V0= D1/(K-g) to find the value of the stock.

(6) Compare your answer to (4) and (5).

3. Assume a stock that will pay dividends of $1.55 each year for the next five years and will have an expected price of $25 in five years. It has a beta of 0.86. Market return is 12% and risk-free rate is 3%.

(1) Find its required rate of return.

(2) Find its value.

(3) If stock price is $18, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain.

(4) If stock price is $22, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain.

Date	amazon price	nasdaq closing price
5/1/16	722.789978	4948.049805
6/1/16	715.619995	4842.669922
7/1/16	758.809998	5162.129883
8/1/16	769.159973	5213.220215
9/1/16	837.309998	5312
10/1/16	789.820007	5189.140137
11/1/16	750.570007	5323.680176
12/1/16	749.869995	5383.120117
1/1/17	823.47998	5614.790039
2/1/17	845.039978	5825.439941
3/1/17	886.539978	5911.740234
4/1/17	924.98999	6047.609863
5/1/17	994.619995	6198.52002
6/1/17	968	6140.419922
7/1/17	987.780029	6348.120117
8/1/17	980.599976	6428.660156
9/1/17	961.349976	6495.959961
10/1/17	1105.280029	6727.669922
11/1/17	1176.75	6873.970215
12/1/17	1169.469971	6903.390137
1/1/18	1450.890015	7411.47998
2/1/18	1512.449951	7273.009766
3/1/18	1447.339966	7063.450195
4/1/18	1566.130005	7066.27002
5/1/18	1629.619995	7442.120117
6/1/18	1699.800049	7510.299805
7/1/18	1777.439941	7671.790039
8/1/18	2012.709961	8109.540039
9/1/18	2003	8046.350098
10/1/18	1598.01001	7305.899902
11/1/18	1690.170044	7330.540039
12/1/18	1501.969971	6635.279785
1/1/19	1718.72998	7281.740234
2/1/19	1639.829956	7532.529785
3/1/19	1780.75	7729.319824
4/1/19	1926.52002	8095.390137
5/1/19	1775.069946	7453.149902
6/1/19	1893.630005	8006.240234
7/1/19	1866.780029	8175.419922
8/1/19	1776.290039	7962.879883
9/1/19	1735.910034	7999.339844
10/1/19	1776.660034	8292.360352
11/1/19	1800.800049	8665.469727
12/1/19	1847.839966	8972.599609
1/1/20	2008.719971	9150.94043
2/1/20	1883.75	8567.370117
3/1/20	1949.719971	7700.100098
4/1/20	2474	8889.549805
5/1/20	2442.370117	9489.870117
6/1/20	2758.820068	10058.76953
7/1/20	3164.679932	10745.26953
8/1/20	3450.959961	11775.45996
9/1/20	3148.72998	11167.50977
10/1/20	3036.149902	10911.58984
11/1/20	3168.040039	12198.74023
12/1/20	3256.929932	12888.28027
1/1/21	3206.199951	13070.69043
2/1/21	3092.929932	13192.34961
3/1/21	3094.080078	13246.87012
4/1/21	3279.389893	13698.37988