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Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index.  (Hint:  Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.)

Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index.  (Hint:  Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The attached file contains hypothetical data for working this problem. Goodman Corporation’s and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown in the file. 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.
  1. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index.  (Hint:  Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) 
A C D F 1 2 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 5 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 2015 because you do not have 2014 data.) 4 7 8 Data as given in the problem are shown below: 9. Goodman Industries Landry Incorporated Market Index 10 Year Stock Price Dividend Stock Price Dividend Includes Divs. $30.32 $2.23 $2.65 $2.73 $2.57 $2.23 $2.25 $85.12 $79.32 $74.32 $87.12 $95.12 $84.25 $3.52 $3.65 $3.45 $3.47 $3.55 $3.25 11 2020 18,475.97 12,174.55 12,019.97 10,743.05 9,455.42 8,163.96 2019 $23.53 $28.61 $15.21 $12.63 $13.21 12 13 2018 14 2017 15 2016 16 2015 17 18 We now calculate the rates of retun for the two companies and the index: 19 20 Goodman Landry Index 21 2020 22 2019 23 2018 24 2017 25 2016 26 27 Average 28 29 Note: To get the average, you could get the column sum and divide by 5, but you could also use the function 30 wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do this for 31 Goodman and then copy the cell for the other items. 32
Transcribed Image Text:A C D F 1 2 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 5 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 2015 because you do not have 2014 data.) 4 7 8 Data as given in the problem are shown below: 9. Goodman Industries Landry Incorporated Market Index 10 Year Stock Price Dividend Stock Price Dividend Includes Divs. $30.32 $2.23 $2.65 $2.73 $2.57 $2.23 $2.25 $85.12 $79.32 $74.32 $87.12 $95.12 $84.25 $3.52 $3.65 $3.45 $3.47 $3.55 $3.25 11 2020 18,475.97 12,174.55 12,019.97 10,743.05 9,455.42 8,163.96 2019 $23.53 $28.61 $15.21 $12.63 $13.21 12 13 2018 14 2017 15 2016 16 2015 17 18 We now calculate the rates of retun for the two companies and the index: 19 20 Goodman Landry Index 21 2020 22 2019 23 2018 24 2017 25 2016 26 27 Average 28 29 Note: To get the average, you could get the column sum and divide by 5, but you could also use the function 30 wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do this for 31 Goodman and then copy the cell for the other items. 32
A C E F 33 b. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. (Hint: Use the 34 sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) 35 36 Use the function wizard to calculate the standard deviations. 37 38 Goodman Landry Index 39 Standard deviation of returns 40 41 42
Transcribed Image Text:A C E F 33 b. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. (Hint: Use the 34 sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) 35 36 Use the function wizard to calculate the standard deviations. 37 38 Goodman Landry Index 39 Standard deviation of returns 40 41 42
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