For this problem, assume you have been asked to evaluate investing some excess cash into the stocks described below. When complete, recommend purchasing Goodman, Landry, just the Market Index or a portfolio of a mix of the three. Defend your recommendation by explaining the items you calculated.

a. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average returns over the five-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 2012 because you do not have 2011 data.)

Data as given in the problem are shown below:

	Goodman Indust.		Landry Corp.		Market Index
Year	Stock Price	Dividends	Stock Price	Dividends	Includes Divs.
2017	$77.13	$4.50	$29.24	$1.82	17,495.97
2016	$76.45	$4.35	$30.88	$1.73	13,178.55
2015	$71.13	$4.13	$27.13	$1.59	13,019.97
2014	$83.88	$3.75	$29.75	$1.50	9,651.05
2013	$88.00	$3.38	$21.13	$1.43	8,403.42
2012	$81.63		$23.06		7,058.96

We now calculate the rates of return for the two companies and the index:

	Goodman Annual Return	1+ Goodman Return	Landry Annual Return	1+Landry Return	Index Annual Return	1+ Index Return
2017	________	________	________	________	________	________
2016	________	________	________	________	________	________
2015	________	________	________	________	________	________
2014	________	________	________	________	________	________
2013	________	________	________	________	________	________
Geometric mean return		________		________		________

Note: To get the geometric mean return, utilize the GEOMEAN formula. Repeat process for Landry and Index.

b. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. (Hint: Use the sample standard deviation formula. If using Excel, it corresponds to the STDEV function.)

Calculate the standard deviations.

	Goodman	Landry	Index
Standard deviation of returns	________	________	________
How would you compare the results?	________

c. Construct a scatter diagram graph that shows Goodmans and Landry returns on the vertical axis and the Market Indexs returns on the horizontal axis.

It is easiest to make scatter diagrams with a data set that has the X-axis variable in the left column, so we reformat the returns data calculated above and show it just below.

Year	Index	Goodman	Landry
2017	0.0%	0.0%	0.0%
2016	0.0%	0.0%	0.0%
2015	0.0%	0.0%	0.0%
2014	0.0%	0.0%	0.0%
2013	0.0%	0.0%	0.0%

Give an interpretation of the data on the graph in the space below.

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________