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I want an answer to the comprehensive/ spreadsheet problem for Question 8-22 chapter 8 of the Fundamentals of financial management book 14th edition? Bartman industries
I want an answer to the comprehensive/ spreadsheet problem for Question 8-22 chapter 8 of the Fundamentals of financial management book 14th edition?
Bartman industries | Reynolds Inc. | Winslow 5000 | ||||||
Year | Stock price | dividends | stock price | dividends | Includes dividends | |||
2014 | $17.25 | $1.15 | $48.75 | $3 | $11,663.98 | |||
2013 | 14.75 | 1.06 | 52.3 | 2.9 | 8785.7 | |||
2012 | 16.50 | 1 | 48.75 | 2.75 | 8679.98 | |||
2011 | 10.75 | 0.95 | 57.25 | 2.5 | 6434.03 | |||
2010 | 11.37 | 0.9 | 60 | 2.25 | 5602.28 | |||
2009 | 7.62 | 0.85 | 55.75 | 2 | 4705.97 |
Q.A | Use the data to calculate annual ratres of return for Bartman, Reynolds, and the Winslow 5000 index. | |||||||||
Then calculate each entity's average return over the 5-year period. |
Q.B | Calculate the standrard deviation for Bartman, Reynolds, and the Winslow 5000. |
Q.C | Calculate the coefficient of variation for Bartman, Reynolds, and the Winslow 5000. |
Q.D | Construct a scatter diagram that shows Bartman's and Reynold's returns on the vertical axis | ||||||||
and the Winslow 5000 Index's returns on horizontal axis. |
Q.E | Estimate Bartman's and Reynold's betas by running regressions of their returns against the index's returns. | ||||||||||
Are these betas consistent with your graph. |
Q.F | Assume that the risk-free rate on long-term Treasury bonds is 6.04% . Assume also that the average annual return | |||||||||||
on the Winslow 5000 in NOT a good estimate of the maerket's required return- it is too high. | ||||||||||||
So use 11% as the expected return on the market. Use the SML equation to calculate the two companies' required returns. |
Q.G | If you formed a portfolio that consisted of 50% Bartman and 50% Reynolds, what would the porfolio's beta and required return be? |
Q.H | Suppose an investor wants to include Baetman Industries's stock in his portfolio. Stock A, B, and C are currently in the portfolio; and their betas are 0.769, 0.985, and 1.423, respectively. | |||||||||||||||||
Calculate the new portfolio's return if it consist of 25% of Bartman, 15 % of stock A, 40% of stock B, and 20 % of stock C. |
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