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 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 2014 because you do not have 2013 data). Data as given in the problem are shown below: Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Divs. 2016 $25.88 $1.73 $73.13 $4.50 17,495.97 2015 $22.13 $1.59 $78.45 $4.35 13,178.55 2014 $24.75 $1.50 $73.13 $4.13 13,019.97 2013 $16.13 $1.43 $85.88 $3.75 9,651.05 2012 $17.06 $1.35 $90.00 $3.38 8,403.42 2011 $11.44 $1.28 $83.63 $3.00 7,058.96 We now calculate the rates of return for the two companies and the index: Goodman Landry Index 2016 2015 2014 2013 2012 Average Note: To get the average, you could get the column sum and divide by 5, but you could also use the function wizard, fx. a. Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index. b. Construct a scatter diagram graph that shows Goodman’s and Landry’ returns on the vertical axis and the Market Index’s returns on the horizontal axis. c. 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). It is easiest to make scatter diagrams with a data set that has the X-axis variable in the left column, so we reformat the returns data calculated above and show it just below. Year Index Goodman Landry 2016 0.0% 0.0% 0.0% 2015 0.0% 0.0% 0.0% 2014 0.0% 0.0% 0.0% 2013 0.0% 0.0% 0.0% 2012 0.0% 0.0% 0.0% d. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns. e. If you formed a portfolio that consisted of 50% Goodman stock and 50% Landry stock, what would be its beta and its required return?