Calculate standard deviations of returns for goodman

Assignment Help Corporate Finance
Reference no: EM131381265

Assignment

Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for questions 1 through 4:

The Goodman Industries' and Landry Incorporated's stock prices and dividends, along with the Market Index, are shown below. 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.

Goodman Industries

Landry Incorporated

Market Index

Year

Stock Price

Dividend

Stock Price

Dividend

Includes Dividends

2013

$25.88

$1.73

$73.13

$4.50

17495.97

2012

22.13

1.59

78.45

4.35

13178.55

2011

24.75

1.50

73.13

4.13

13019.97

2010

16.13

1.43

85.88

3.75

9651.05

2009

17.06

1.35

90.00

3.38

8403.42

2008

11.44

1.28

83.63

3.00

7058.96

1. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks and the index. (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 then 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 2008 because you do not have 2007 data.)

2. Calculate the standard deviations 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.)

3. What dividends do you expect for Goodman Industries stock over the next 3 years if you expect the dividend to grow at the rate of 5% per year for the next 3 years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50.

4. Assume that Goodman Industries' stock has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for 3 years, and then sell it for $27.05, what is the most you should pay for it?

Reference no: EM131381265

Questions Cloud

Eliminate or worsen a disaster impacts : Is it possible for mitigation activities to eliminate or worsen a disaster's impacts, and if so, how? Identify any factors that may impact those efforts, either negatively or positively.
Do all three prototypes have the same average range : Do all three prototypes have the same average range? Construct an ANOVA table, and carry out the test. Explain your results.
Summarize the situation and identify any ethical dilemmas : Summarize the situation, and identify any ethical dilemmas. Describe how you, as a human services professional, would approach this ethical dilemma while doing the following:Implementing the least intrusive intervention.Respecting confidentiality.Rec..
Role in organizational accidents : Explain what factors can play a role in organizational accidents similar to the one highlighted in the scenario: How organizational processes give rise to potential failures?
Calculate standard deviations of returns for goodman : FIN 534- Calculate the standard deviations 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.)
Identify and evaluate human resources risks-opportunities : Leveraging the work completed in the Individual Assignments for Units 2 and 3, assess the company's human resources competitive position. Be sure to evaluate the company's position within the industry and among its comparator group.Leveraging the ..
Research and describe five leadership theories : Complete the LP Leadership assignment. In addition to teaching about leadership, this assignment will challenge your research, citation and paraphrasing skills. Research and describe five leadership theories
Charismatic or transformational leader you have known : Do you believe everyone has the same capability to become a servant leader, or are some people by their nature more inclined to be a servant leaders? Explain! Describe a charismatic or transformational leader you have known.
What should we do if such violations exist : How can we determine whether there are violations of the ANOVA model assumptions?- What should we do if such violations exist?

Reviews

Write a Review

Corporate Finance Questions & Answers

  Question 1 seattle health plans currently uses zero debt

question 1 seattle health plans currently uses zero debt financing. its operating income ebit is 1 million and it pays

  Grossman corporation is considering a new project requiring

Grossman Corporation is considering a new project requiring a $ 30,000 investment in an asset having no salvage value.

  Valley proteins is evaluating the purchase of a new

valley proteins is evaluating the purchase of a new centrifuge to be used in settling out the fine particles from the

  Tvm calculationsyou are 40 years old and plan to retire in

tvm calculationsyou are 40 years old and plan to retire in exactly 20 years. starting 21 years from now you will need

  Explain scenario that adversely affect banks performance

Risk from Speculating Seattle Bank just took speculative positions by borrowing Canadian dollars and converting the funds to invest in Australian dollars. Explain a possible future scenario that could adversely affect the bank's performance.

  1 interpreting bond yieldsnbsp suppose you buy a 7 percent

1. interpreting bond yields.nbsp suppose you buy a 7 percent coupon 20-year bond today when its first issued. nbspif

  Explain how a firm can use swaptions

Explain how a firm can use swaptions to achieve this desired result. Also, identify and compare an alternative method that can be used to convert fixed-rate debt to floatingrate debt.

  Ampex common stock has a beta of 14 if the risk-free rate

ampex common stock has a beta of 1.4. if the risk-free rate is 8 percent the expected market return is 16 percent and

  What is the firms current debt-equity ratio

What is the firm's current debt/equity ratio? What is the firm's current weighted average cost of capital? What will the firm's cost of equity be after this additional borrowing?

  How jack ltd should account for results of impairment test

Determine how Jack Ltd should account for the results of the impairment test at 30 June 2015 and 30 June 2016, and prepare any necessary journal entries.

  Determine the amount of mr. holts bonus

Determine the amount of Mr. Holt's bonus if the original computation of net present value were based on $90,000 versus $70,000 and Speculate about the long-term effect the bonus plan is likely to have on the company.

  Compute an effective annualized interest rate cost for usd

Compute an effective annualized interest rate cost (all-in cost) for the USD tranche of the Eurobond. What information would you need to obtain the dollar all-in cost of the yen tranche?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd