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	StockA:		StockB:		MarketIndex
	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. Use the data given tocalculate annual returns for Stock A, Stock B, and the MarketIndex, and then calculate average annual returns for the two stocksand the index. (Hint: Remember, returns are calculated bysubtracting the beginning price from the ending price to get thecapital gain or loss, adding the dividend to the capital gain orloss, and then dividing the result by the beginning price. Assumethat dividends are already included in the index. Also, you cannotcalculate the rate of return for 2011 because you do not have 2010data.)
2. Calculate the standarddeviations of the returns for Stock A, Stock B, and the MarketIndex. (Hint: Use the sample standard deviation formula given inthe chapter, which corresponds to the STDEV function inExcel.)
3. What dividends do you expectfor Stock A over the next three years if you expect the dividend togrow at the rate of 3% per year for the next three years? In otherwords, calculate D1, D2, and D3. Note that D0 = $1.50.
4. Assume that Stock A has arequired return of 13%. You will use this required return rate todiscount the dividends calculated earlier. If you plan to buy thestock, hold it for three years, and then sell it for $27.05, whatis the most you should pay for it?