AS x xa. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calcu B D E . J 5 6 a. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then 7 calculate average returns over the five-year period. (Hint: Remember, returns are calculated by subtracting 8 the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain 9 or loss, and dividing the result by the beginning price. Assume that dividends are already included in the 10 index. Also, you cannot calculate the rate of return for 2014 because you do not have 2013 data. 11 12 Data as given in the problem are shown below: 3 Goodman Industries Landry Incomorated Market Index Year Stock Price Dividend Stock Price Dividend includes Divs. 5 2019 $25.88 $1.73 $73.13 $4.50 17,495.97 6 2018 $22.13 $1.59 $78.45 $4.35 13,178.55 7 2017 $24.75 $1.50 $73.13 $4.13 13,019.97 8 2016 $16.13 $1.43 $85.88 $3.75 9,651.05 9 2015 $17.06 $1.35 $90.00 $3.38 8,403.42 0 2014 $11.44 $1.28 $83.63 $3.00 7,058.96 1 2 We now calculate the rates of retum for the two companies and the index: 3 4 Goodman Landry Index 5 2019 8 2018 7 2016 9 2015 2017 1 Average 3 Note: To get the average, you could get the column sum and divide by 5, but you could also use the function wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do this for 5 Goodman and then copy the cell for the other items 5 7 b. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. (Hint: Use the 3 sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) Use the function wizard to calculate the standard deviations. Goodman Landry Index 3 Standard deviation of retums Palle B A5 Saa. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate avera B C H j 47. Construct a scattor diagram graph that shows Goodman's and Landry' returns on the vertical axis and the 48 Market Index's returns on the horizontal axis. 49 50 it is easiest to make scatter diagrams with a data set that has the X-axis variable in the left column, 51 so we reformat the retums data calculated above and show just below. 52 53 Year Index Goodman Landry 54 2019 0.0% 0.0% 0.0% 55 2018 0.0% 0.0% 0.0% 56 2017 0.ON 0.0% 0.0% 57 2016 0.ON 0.0% 0.0% 58 2015 0.0% 0.0% 0.0% 59 60 61 152 183 164 65 56 57 58 70 71 72 273 74 75 76 To make the graph, we first selected the range with the retums and the column heads, then clicked the chart wizard, 17 then choose the scatter diagram without connected lines. That gave us the data points. We then used the drawing 8 toolbar to make free-hand (by eye") regression lines, and changed the lines color and weights to match the dots. BO 31 32 33 d. Estimate Goodman's and Landry's betas as the slopes of regression lines with stock returns on the 34 vertical axis ly-axis) and market return on the horizontal axis (x-axis). (Hint use Excel's SLOPE function.) 35 Are these betas consistent with your graph? 36 37 Goodman's beta = 38