Excel Activity: Evaluating Risk and Return adjusted to include dividends. calculations. Use a minus sign to enter negative values, if any. Download spreadsheet Evaluating Risk and Return-207893.xIsX Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2015 because you do not have 2014 data.) Round your answers to two decimal places. Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2015 because you do not have 2014 data.) Round your answers to two decimal places. b. Calculate the standard deviations of the returns for Bartman, Reynolds, and the Winslow 5000. (Hint: Use the sample standard deviation the STDEV.S function in Excel.) Round your answers to two decimal places. c. Calculate the coefficients of variation for Bartman, Reynolds, and the Winslow 5000. Round your answers to two decimal places. d. Assume the risk-free rate during this time was 4%. Calculate the Sharpe ratios for Bartman, Reynolds, and the Index over this period using their average returns. answers to four decimal places. s graph. graph. The correct graph is Bartman's beta: Reynolds's beta: Are these betas consistent with your graph? These betas consistent with the scatter diagrams. g. Assume that the risk-free rate on long-term Treasury bonds is 5.5%. Assume also that the average annual return on the Winslow 5000 is not a good estimate of the market's required return-it is too high. So use 10% as the expected return on the market. Use the SML equation to calculate the two companies' required returns. Round your answers to two decimal places. Bartman's required return: % Bartman's beta: Reynolds's beta: Are these betas consistent with your graph? These betas consistent with the scatter diagrams. required return-it is too high. So use 10% as the expected return on the market. Use the SML equation to calculate the companies' required returns. Round your answers to two decimal places. Bartman's required return: % Reynolds's required return: % h. If you formed a portfolio that consisted of 50% Bartman and 50% Reynolds, what would the portfolio's beta and required return be? Round your answer for the portfolio's beta to four decimal places and for the portfolio's required return to two decimal places. Portfolio's beta: Portfolio's required return: % i. Suppose an investor wants to include Bartman Industries's stock in his portfolio. Stocks A, B, and C are currently in the portfolio, and their betas are 0.850, 0.933, and 1.398, respectively. Calculate the new portfolio's required return if it consists of 20% of Bartman, 10% of Stock A, 50% of Stock B, and 20% of Stock Cound answer to two decimal places. %
