In: Finance
Stock A: | Stock B: | Market Index | |||
---|---|---|---|---|---|
Stock Price | Dividend | Stock Price | Dividend | ||
2016 | $25.88 | $1.73 | $73.13 | $4.50 | $17.09 |
2015 | $22.93 | $1.59 | $78.45 | $4.35 | $13.27 |
2014 | $24.75 | $1.50 | $73.13 | $4.13 | $13.01 |
2013 | $16.13 | $1.43 | $85.88 | $3.75 | $9.96 |
2012 | $17.16 | $1.35 | $90.00 | $3.38 | $8.40 |
2011 | $11.44 | $1.28 | $86.33 | $3.00 | $7.05 |
1.
Stock A return for 2012=((17.16-11.44)+1.35)/11.44=61.8%
Similarly stock's return for 2012=((90-86.33)+3)/86.33=8.17%
Index return for 2012=(8.4-7.05)/7.05=19.15%
Similarly, return all other year's are given below:
Year | Stock A Price | Dividend | Stock A return | Stock B price | Dividend | Stock B return | Index | Index Return |
2016 | 25.88 | 1.73 | 20.41% | 73.13 | 4.5 | -1.05% | 17.09 | 28.79% |
2015 | 22.93 | 1.59 | -0.93% | 78.45 | 4.35 | 13.22% | 13.27 | 2.00% |
2014 | 24.75 | 1.5 | 62.74% | 73.13 | 4.13 | -10.04% | 13.01 | 30.62% |
2013 | 16.13 | 1.43 | 2.33% | 85.88 | 3.75 | -0.41% | 9.96 | 18.57% |
2012 | 17.16 | 1.35 | 61.80% | 90 | 3.38 | 8.17% | 8.4 | 19.15% |
2011 | 11.44 | 1.28 | 86.33 | 3 | 7.05 |
2. Hence, by using the stdev formula in excel standard deviation for stock A, B and index are 31.2%,9% and 11.37% respectively.
3. If D0=1.5, then D1=1.5*1.03=$1.545, D2=1.5*1.03^2=$1.591 and D3=1.5*1.03^3=$1.639
4. The amount you should pay= 27.05/(1+13%)^3=$18.74