7/16/2015 Solution Chapter: Problem: 15 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 2010 o because you do not have 2009 data.) 12 Data as given in the problem are shown below: Goodman Industries Year Stock Price Dividend 2016 $25.88 $1.73 2015 $22.13 $1.59 2014 $24.75 $1.50 2013 $16.13 $1.43 2012 $17.06 $1.35 2011 $11.44 $1.28 Landry Incorporated Stock Price $73.13 $78.45 $73.13 $85.88S $90.00 $83.63 Market Index Dividend Includes Divs. $4.50 17,495.97 $4.35 13.178.55 $4.13 13.019.97|| $3.75 9,651.05 $3.38 8,403.421 $3.00 7,058.96 22 We now calculate the rates of return for the two companies and the index: Goodman Landry Index 2016 2015 2014 2013 2012 31 Average 32 33 Note: To get the average, you could get the column sum and divide by 5, but you could also use the function 34 wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do 35 this for Goodman and then copy the cell for the other items. b. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. 3 (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the 9 Use the function wizard to calculate the standard deviations. Goodman Landry Index 13 Standard deviation of returns 46 47 c. Construct a scatter diagram graph that shows Goodman's and Landry' returns on the vertical 48 axis and the Market Index's returns on the horizontal axis. 49 50 it is easiest to make scatter diagrams with a data set that has the X-axis variable in the left 51 column, so we reformat the returns data calculated above and show it just below. 52 ELENCE 53 Year Index Goodman Landry 542016 0 .0% 0.0% 0.0% 2015 0 .0% 0.0% 2014 0 .0% 0.0% 0.0% 2013 0.0% 0.0% 0.0% 20120 .0% 0.0% de