P8-1NOTE: 2 problems, one for each tabProblem 8-1Expected return

Complete the table below, to calculate the expected rate of return, 2, standard deviation, and coefficient of variationOptional: can break column E calculation A stock's returns have the following distribution:into the following three steps

Demand for the Company's Products Probability of Demand OccurringRate of Return if This Demand Occurs Weighted return(ri - rexpected)2pi(ri - rexpected)(ri - rexpected)2(ri - rexpected)2piWeak0.1-50%-5.0%3.77%-61.400%37.7%3.77%Below Average0.2-5%-1.0%0.54%-16.400%2.7%0.54%Average0.416%6.4%0.08%4.600%0.2%0.08%Above Average0.225%5.0%0.37%13.600%1.8%0.37%Strong0.160%6.0%2.36%48.600%23.6%2.36%Total1.00011.4%7.1244%Expected rate of return2

Standard deviation of return, 26.7%

Coefficient of Variation (/rexpected)2.34

P8-22Problem 8-22

Bartman Industries' and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shownbelow for the period 2006-2011. The Winslow 5000 data are adjusted to include dividends.a. Table 1: Use the data to calculate the dividend yield, capital gains yields and annual rates of return for Bartman and Reynolds. Table 2: Link to Bartman's and Reynolds' total return. Calculate the annual rates of return for the Winslow 5000 Index. Table 2: Then calculate each entity's average return over the five-year period. Table 1Data as given in the problem are shown below:BartmanReynoldsBartman IndustriesReynolds IncorporatedWinslow 5000DYCGY Total ReturnDYCGY Total ReturnYearStock PriceDividendStock PriceDividendIncludes Divs.(D1/P0)(P1 - P0)/P0DY+CGY(D1/P0)(P1 - P0)/P0DY+CGY2011$17.250$1.150$48.750$3.00011,663.987.8%16.95%24.75%5.74%-6.79%-1.05%201014.7501.06052.3002.9008,785.706.4%-10.61%-4.18%5.95%7.28%13.23%200916.5001.00048.7502.7508,679.989.3%53.49%62.79%4.80%-14.85%-10.04%200810.7500.95057.2502.5006,434.038.4%-5.49%2.86%4.17%-4.58%-0.42%200711.3750.90060.0002.2505,602.2811.8%49.18%60.98%4.04%7.62%11.66%20067.6250.85055.7502.0004,705.97Table 2We now calculate the rates of return for the two companies and the index for 2007-2011:

BartmanReynoldsIndex201124.7%-1.1%32.8%2010-4.2%13.2%1.2%200962.8%-10.0%34.9%20082.9%-0.4%14.8%200761.0%11.7%19.0%

Avg Returns29.4%2.7%20.6%

b. Calculate the standard deviations of the returns for Bartman, Reynolds, and the Wiinslow 5000. (Hint: Use the sample standard deviation formula which corresponds to the STDEV function in Excel.) BartmanReynoldsIndexStandard deviation of return31.5%9.7%13.8%

c. Now calculate the coefficients of variation for Bartman, Reynolds, and the Wiinslow 5000.

BartmanReynoldsIndexCoefficient of Variation1.073.630.67