(6-14)

Evaluating Risk and Return Start with the partial model in the file Ch06 P14 Build a Model.xls on the textbook’sWeb site. The file contains hypothetical data for working this problem. Bartman Industries’s and Reynolds Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.

Year r –

A r –

B 2006 −18.00% −14.50%

2007 33.00 21.80 2008 15.00 30.50 2009 −0.50 −7.60 2010 27.00 26.30 Year Stock X Stock Y Market 2006 14% 13% 12%

2007 19 7 10 2008 −16 −5 −12 2009 3 1 1 2010 20 11 15 260 Part 3: Stocks and Options