FIN 534 Homework Set #3Directions: Reply the next questions on a separate doc. Clarify the way you reached the reply or present your work if a mathematical calculation is required, or each.Use the next info for questions 1 via eight:The Goodman Industriesâ and Landry Incorporatedâs inventory costs and dividends, together with the Market Index, are proven beneath. Inventory costs are reported for December 31 of every 12 months, and dividends replicate these paid throughout the 12 months. The market knowledge are adjusted to incorporate dividends.Goodman Industries Landry Included Market IndexYear Inventory Worth Dividend Inventory Worth Dividend Contains Dividends2013 $25.88 $1.73 $73.13 $four.50 17.49 5.972012 22.13 1.59 78.45 four.35 13.17 eight.552011 24.75 1.50 73.13 four.13 13.01 9.972010 16.13 1.43 85.88 three.75 9.65 1.052009 17.06 1.35 90.00 three.38 eight.40 three.422008 11.44 1.28 83.63 three.00 7.05 eight.961. Use the info given to calculate annual returns for Goodman, Landry, and the Market Index, after which calculate common annual returns for the 2 shares and the index. (Trace: Keep in mind, returns are calculated by subtracting the start worth from the ending worth to get the capital achieve or loss, including the dividend to the capital achieve or loss, after which dividing the end result by the start worth. Assume that dividends are already included within the index. Additionally, you can not calculate the speed of return for 2008 since you should not have 2007 knowledge.) 2. Calculate the usual deviations of the returns for Goodman, Landry, and the Market Index. (Trace: Use the pattern normal deviation components given within the chapter, which corresponds to the STDEV operate in Excel.)three. Estimate Goodmanâs and Landryâs betas because the slopes of regression traces with inventory return on the vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Trace: Use Excelâs SLOPE operate.) Are these betas constant together with your graph? four. The danger-free price on long-term Treasury bonds is 6.04%. Assume that the market danger premium is 5%. What's the required return in the marketplace utilizing the SML equation?
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