IFM12 Ch02 P15 Student Build a Model COMPLETE - Student...

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StudentAnna Pomyatinskaya2/11/2017Chapter:2Problem:15Data as given in the problem are shown below:Goodman IndustriesLandry IncorporatedMarket IndexYearStock PriceDividendStock PriceDividend Includes Divs.2015$25.88$1.73$73.13$4.5017,495.972014$22.13$1.59$78.45$4.3513,178.552013$24.75$1.50$73.13$4.1313,019.972012$16.13$1.43$85.88$3.759,651.052011$17.06$1.35$90.00$3.388,403.422010$11.44$1.28$83.63$3.007,058.96We now calculate the rates of return for the two companies and the index:GoodmanLandryIndex201524.8%-1.0%32.8%2014-4.2%13.2%1.2%201362.7%-10.0%34.9%20122.9%-0.4%14.8%201160.9%11.7%19.0%Average29.4%2.7%20.6%Use the function wizard to calculate the standard deviations.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 because you do not have 2009 data.)Note: To get the average, you could get the column sum and divide by 5, but you could also use the function wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do this for Goodman GoodmanLandryIndexStandard deviation of returns31.4%9.7%13.8%Based on this, Goodman is the most risky, Landry is the least risky.

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