Rate of return, standard deviation, coefficient ofvariation  Personal Finance Problem 

  Mike is searching for a stock to include in his current stockportfolio. He is interested in Hi-Tech Inc.; he has been impressedwith the company's computer products and believes Hi-Tech is aninnovative market player. However, Mike realizes that any time youconsider a technology stock, risk is a major concern. The rule hefollows is to include only securities with a coefficient ofvariation of returns below 1.25. Mike has obtained the followingprice information for the period 2015 through 2018:

Beginning End

2015 $14.94 $20.04

2016 $20.04. $64.87

2017 $64.87. $72.91

2018 $72.91. $90.21

Hi-Tech stock, being growth-oriented, did not pay any dividendsduring these 4 years.

a.  Calculate the rate of return for each year, 2015 through2018, for Hi-Tech stock.

b.  Assume that each year's return is equally probable andcalculate the average return over this time period.

c.  Calculate the standard deviation of returns over the past 4years.   (Hint: Treat this data as a sample.)

d.  Based on b and c determine the coefficient of variation ofreturns for the security.

e.  Given the calculation in d what should be Mike's decisionregarding the inclusion of Hi-Tech stock in his portfolio?