Rate of return, standard deviation, coefficient of variation Personal Finance Problem Mike is searching for a stock to i

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Rate Of Return Standard Deviation Coefficient Of Variation Personal Finance Problem Mike Is Searching For A Stock To I 1 (175.7 KiB) Viewed 49 times

Rate of return, standard deviation, coefficient of variation Personal Finance Problem Mike is searching for a stock to include in his current stock portfolio. He is interested in Hi-Tech Inc.; he has been impressed with the company's computer products and believes Hi-Tech is an innovative market player. However, Mike realizes that any time you consider a technology stock, risk is a major concern. The rule he follows is to include only securities with a coefficient of variation of returns below 0.97. Mike has obtained the following price information for the period 2015 through 2018: 4 years. Hi-Tech stock, being growth-oriented, did not pay any dividends during these a. Calculate the rate of return for each year, 2015 through 2018, for Hi-Tech stock. b. Assume that each year's return is equally probable and calculate the average return over this time period. c. Calculate the standard deviation of returns over the past 4 years. (Hint: Treat this data as a sample.) d. Based on b and c determine the coefficient of variation of returns for the security. e. Given the calculation in d what should be Mike's decision regarding the inclusion of Hi-Tech stock in his portfolio? X Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Stock price Beginning End Year 2015 $14.48 $22.87 2016 $22.87 $63.61 2017 $63.61 $71.62 2018 $71.62 $90.96