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Need answers for the last two questions, g. and h. Would be better if it's shown in excel. Bata Shoe and Renata Ltd.'s stock prices
Need answers for the last two questions, g. and h. Would be better if it's shown in excel.
Bata Shoe and Renata Ltd.'s stock prices and dividends, along with the Dhaka Stock Exchange (DSE) Index, are shown here for the period 2014-2019. The DSE Index data are adjusted to include dividends. Data as given in the problem are shown below: Bata Shoe Renata Ltd. Year 2019 2018 2017 2016 2015 2014 Stock Price Tk. 33.250 31.550 32.400 34.350 35.375 36.625 Dividend Tk. 2.600 2.400 1.940 2.250 1.666 2.100 Stock Price Tk. 54.750 54.300 52.750 53.000 51.500 54.750 Dividend Tk. 1.500 3.400 1.850 2.250 1.900 2.300 Market Index Includes Divs. 9,740.98 7,444.70 8,002.98 7,394.03 6,684.28 5,317.00 a. Use the data given to calculate annual returns for Bata, Renata, 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 2014 because you do not have 2013 data.) b. Calculate the standard deviation of the returns for Bata, Renata, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) c. Now calculate the coefficients of variation Bata, Renata, and the Market Index. d. Construct a scatter diagram graph that shows Bata's and Renata's returns on the vertical axis and the market index's returns on the horizontal axis. e. Estimate Bata's and Renata's betas by running regressions of their returns against the Market Index's returns. Are these betas consistent with your graph? f. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 7%. What is the expected return on the market? Now use the SML equation to calculate the two companies required returns. g. If you formed a portfolio that consisted of 58% Bata and 42% Renata, what would be its beta and its required return? h. Suppose an investor wants to include Bata Shoe's stock in his or her portfolio. Stocks 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 required return if it consists of 25 percent of Bata, 15 percent of Stock A, 40 percent of Stock B, and 20 percent of Stock CStep by Step Solution
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