Question: please provide answer not in excel Use Bartman Industries and Reynolds Incorporateds stock prices and dividends, along with the Market Index, shown below for the
please provide answer not in excel
Use Bartman Industries and Reynolds Incorporateds stock prices and dividends, along with the Market Index, shown below for the period 2012-2017- to answer the following questions
| Year | Stock Price | Dividend | Stock Price | Dividend | Includes Dividends |
|---|---|---|---|---|---|
| 2017 | $17.25 | $1.15 | $48.75 | $3.00 | $11,663.98 |
| 2016 | 14.75 | 1.06 | 52.30 | 2.90 | 8,785.70 |
| 2015 | 16.50 | 1.00 | 48.75 | 2.75 | 8,679.98 |
| 2014 | 10.75 | 0.95 | 57.25 | 2.50 | 6,434.03 |
| 2013 | 11.37 | 0.90 | 60.00 | 2.25 | 5,602.28 |
| 2012 | 7.62 | 0.85 | 55.75 | 2.00 | 4,705.97 |
Use the data given to calculate annual returns for Bartman, Reynolds, and the Market Index, and then calculate average returns over the 5-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 1997 because you do not have 1996 data.)
b. Calculate the standard deviations of the returns for Bartman, Reynolds, and the Market Index.
c. Now calculate the coefficients of variation for Bartman, Reynolds, and the Market Index.
d. Construct a scatter diagram graph that shows Bartmans and Reynolds returns on the vertical axis and the Market Indexs returns on the horizontal axis.
e. Estimate Bartmans and Reynolds betas by running regressions of their returns against the Indexs returns. Are these betas consistent with your graph?
f. The risk-free rate on long-term Treasury bonds is 6.04 percent. Assume that the market risk premium is 5 percent. 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 50 percent of Bartman stock and 50 percent of Reynolds stock, what would be its beta and its required return?
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