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. Estimate Goodman’s and Landry’s betas as the slopes of regression lines with stock returns on the vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Hint: use Excel’s SLOPE function.) Are these betas consistent with your graph?
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. Estimate Goodman’s and Landry’s betas as the slopes of regression lines with stock returns on the vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Hint: use Excel’s SLOPE function.) Are these betas consistent with your graph?
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
Related questions
Question
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.
- Estimate Goodman’s and Landry’s betas as the slopes of regression lines with stock returns on the vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Hint: use Excel’s SLOPE function.) Are these betas consistent with your graph?
Transcribed Image Text:A
C
E
F
77 d. Estimate Goodman's and Landry's betas as the slopes of regression lines with stock returns on the
78 vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Hint: use Excel's SLOPE function.)
79 Are these betas consistent with your graph?
80
81
Goodman's beta =
82
83
Landry' beta =
84
85
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education