Question: Use the following data to explore the return-risk relation and the concept of beta for Goodman Industries stock, Landry Incorporated stock, and the market index:
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Part 1: Risk and Beta
A) Calculate the return each year for Goodman, Landry, and the Market using the equation Return = (Value this year - Value last year) / Value last year. In addition, use the Excel function to find the average of the returns
B) Calculate the standard deviation of returns for Goodman, Landry, and the Market using the Excel function
C) Make a scatter plot of stock returns (y-axis) against market returns (x-axis) for both Goodman and Landry stock in one plot. Add a linear trend line to the scatter plot for each stock and include the equation on the chart. Label the y-axis, x-axis, legend, and chart title
Landry Incorporated Stock Price Market Index Year Goodman Industries Stock Price $25.88 $73.13 2013 17,495.97 2012 $22.13 $78.45 13,178.55 2011 $24.75 $73.13 13,019.97 $16.13 $85.88 2010 9,651.05 $17.06 $90.00 2009 8,403.42 $11.44 $83.63 2008 7,058.96
Step by Step Solution
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Formulas for the above values are as follows 1 2 3 4 Year 5 6 7 8 9 10 91 11 12 ... View full answer
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