Excel Activity: Evaluating Risk and Return Bartman Industries's and Reynolds Inc.'s stock prices and dividends, along...

Transcribed Image Text:

Excel Activity: Evaluating Risk and Return Bartman Industries's and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2015-2020. The Winslow 5000 data are adjusted to include dividends. Bartman Industries Reynolds Inc. Winslow 5000 Year Stock Price Dividend Stock Price Dividend Includes Dividends 2020 $17.10 $1.14 $48.25 $2.80 $11,502.19 2019 14.85 1.06 52.70 2.75 8,763.07 2018 16.40 1.00 48.25 2.60 8,669.91 2017 10.90 0.95 57.85 2.40 6,364.70 2016 11.52 0.90 2015 7.62 0.85 61.40 56.85 2.15 1.90 5,623.63 4,727.04 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Use a minus sign to enter negative values, if any. Download spreadsheet Evaluating Risk and Return-f6e66d.xlsx a. Use the data to calculate annual rates of return for Bartman, Reynolds, and the Winslow 5000 Index. Then calculate each entity's average return over the 5-year period. (Hint: 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. Year 2020 2019 2018 2017 2016 Average Bartman Industries Reynolds Inc. Winslow 5000 % % % % % % % % % % % % % % % % % % b. Calculate the standard deviations of the returns for Bartman, Reynolds, and the Winslow 5000. (Hint: Use the sample standard deviation formula, which corresponds to the STDEV.S function in Excel.) Round your answers to two decimal places. Standard deviation Bartman Industries Reynolds Inc. Winslow 5000 % % % c. Calculate the coefficients of variation for Bartman, Reynolds, and the Winslow 5000. Round your answers to two decimal places. Bartman Industries Coefficient of variation Reynolds Inc. Winslow 5000 d. Assume the risk-free rate during this time was 3%. Calculate the Sharpe ratios for Bartman, Reynolds, and the Index over this period using their average returns. Round your answers to four decimal places. Sharpe ratio Bartman Industries Reynolds Inc. Winslow 5000 e. Construct a scatter diagram that shows Bartman's and Reynolds's returns on the vertical axis and the Winslow 5000 Index's returns on the horizontal axis. Choose the correct graph. The correct graph is graph C A. 70% 60% 50% Stocks' Returns 40% 30% 20% Stocks' Returns vs. Index's Returns B. Stocks' Returns vs. Index's Returns 70% 60% 50% Stocks' Returns 40% 30% 20% 10% 0% 30% 40% 10% 20% 30% 40% -10% -20% Index's Returns Bartman Industries Reynolds Inc. 10% 0% 10% 20% -10% -20% Index's Returns Bartman Industries Reynolds Inc. C. Stocks' Returns vs. Index's Returns D. Stocks' Returns vs. Index's Returns 70% 70% 60% 60% 50% 50% Stocks' Returns 40% 30% 20% Stocks' Returns 40% 30% 20% 10% 10% 0% 0% 10% 20% 30% 40% 10% 20% 30% 40% -10% -10% -20% Index's Returns Bartman Industries Reynolds Inc. -20% Index's Returns Bartman Industries Reynolds Inc. Excel Activity: Evaluating Risk and Return Bartman Industries's and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2015-2020. The Winslow 5000 data are adjusted to include dividends. Bartman Industries Reynolds Inc. Winslow 5000 Year Stock Price Dividend Stock Price Dividend Includes Dividends 2020 $17.10 $1.14 $48.25 $2.80 $11,502.19 2019 14.85 1.06 52.70 2.75 8,763.07 2018 16.40 1.00 48.25 2.60 8,669.91 2017 10.90 0.95 57.85 2.40 6,364.70 2016 11.52 0.90 2015 7.62 0.85 61.40 56.85 2.15 1.90 5,623.63 4,727.04 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Use a minus sign to enter negative values, if any. Download spreadsheet Evaluating Risk and Return-f6e66d.xlsx a. Use the data to calculate annual rates of return for Bartman, Reynolds, and the Winslow 5000 Index. Then calculate each entity's average return over the 5-year period. (Hint: 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. Year 2020 2019 2018 2017 2016 Average Bartman Industries Reynolds Inc. Winslow 5000 % % % % % % % % % % % % % % % % % % b. Calculate the standard deviations of the returns for Bartman, Reynolds, and the Winslow 5000. (Hint: Use the sample standard deviation formula, which corresponds to the STDEV.S function in Excel.) Round your answers to two decimal places. Standard deviation Bartman Industries Reynolds Inc. Winslow 5000 % % % c. Calculate the coefficients of variation for Bartman, Reynolds, and the Winslow 5000. Round your answers to two decimal places. Bartman Industries Coefficient of variation Reynolds Inc. Winslow 5000 d. Assume the risk-free rate during this time was 3%. Calculate the Sharpe ratios for Bartman, Reynolds, and the Index over this period using their average returns. Round your answers to four decimal places. Sharpe ratio Bartman Industries Reynolds Inc. Winslow 5000 e. Construct a scatter diagram that shows Bartman's and Reynolds's returns on the vertical axis and the Winslow 5000 Index's returns on the horizontal axis. Choose the correct graph. The correct graph is graph C A. 70% 60% 50% Stocks' Returns 40% 30% 20% Stocks' Returns vs. Index's Returns B. Stocks' Returns vs. Index's Returns 70% 60% 50% Stocks' Returns 40% 30% 20% 10% 0% 30% 40% 10% 20% 30% 40% -10% -20% Index's Returns Bartman Industries Reynolds Inc. 10% 0% 10% 20% -10% -20% Index's Returns Bartman Industries Reynolds Inc. C. Stocks' Returns vs. Index's Returns D. Stocks' Returns vs. Index's Returns 70% 70% 60% 60% 50% 50% Stocks' Returns 40% 30% 20% Stocks' Returns 40% 30% 20% 10% 10% 0% 0% 10% 20% 30% 40% 10% 20% 30% 40% -10% -10% -20% Index's Returns Bartman Industries Reynolds Inc. -20% Index's Returns Bartman Industries Reynolds Inc.