Question
4 part question 1 Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns
4 part question 1 Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks and the index. Assume that dividends are already included in the index. 2 Calculate the standard deviations of the returns for Goodman, Landry, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel). 3 What dividends do you expect for Goodman Industries stock over the next 3 years if you expect the dividend to grow at the rate of 5% per year for the next 3 years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50 4 Assume that Goodman Industries stock has a required return of 13%. You will use this required to pay for it return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for 3 years, and then sell it for $27.05, what is the most you should pay for it?
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