GOODMAN PRICE DIVIDEND LANDRY PRICE MARKET INDEX DIVIDEND 2020 2019 2018 2017 2016 2015 30.32 23.53 28.61 15.21 12.63 13.21 2.23 2.65 2.73 2.57 2.23 2.25 85.12 79.32 74.32 87.12 95, 12 84.25 3.52 3.65 3.45 3.47 3.55 3.25 18475.97 12174.55 12019.97 10743.05 9455.42 8163.96 RATES OF RETURN GOODMAN 2020 38.33% [-(EG24+EH24-EG25)/EG25] 2019 -8.49% 2018 106.05% 2017 40.78% 2016 12.49% LANDRY 11.75% (-(EJ24+EK24-E125)/EJ25) 11.64% -10.73% -4.76% 17.12% MARKET 51.76% (-(EM24-EM25)/EM25) 1.29% 11.89% 13.62% 15.82% AVERAGE 37.83% (-AVERAGE(EG33:EG37) 5.00% ("AVERAGE(E133:137) 18.87% (=AVERAGE(EM33:EM37)] A 1 2 Good Man Industries 3 Landry Incorporated 4 Market Index Standard Deviation 43.16% 12.03% 19.21% Required Return for Good man=Rf+ Beta- MRP = 8.04% +0.28=(6%) = 9.72% Required return for Landry = 8.04%+0.16*6% - 3.24% Required return=Risk Premium + Risk free rate = 6% +8.04% = 11.04% Goodman's beta 0.28 Landry' beta = 0.16 a. Suppose an investor wants to include Goodman Industries' stock in his or her portfolio. Stocks A.B, and are currently in the portfolio, and their betas are 0.769,0.985, and 1.423, respectively. Calculate the new portfolio's required return if it consists of 30% of Goodman, 20% of Stock A, 30% of Stock B, and 20% of Stock C