Personal Finance Problem: Rate of return, standard deviation, coefficient of variation

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 0.90.

Mike has obtained the following price information for the period 2012 through 2015. Hi-Tech stock, being growth oriented, did not pay any dividends during those 4 years.

Calculate the rate of return for each year, 2012 through 2015, for Hi-Tech stock.

Assume that each year's return is equally probable, and calculate the average return over this time period.

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

Based on B and C, determine the coefficient of variation of returns for the security.

Given the calculation in d, what should be Mike's decision regarding the inclusion of Hi-Tech stock in his portfolio?

	Stock Price				r		(r - ? )
Year	Beginning		End		Rate of returns		Variance
2012	$14.36		$21.55		50.07%		0.0495
2013	$21.55		$64.78		200.60%		4.0242
2014	$64.78		$72.38		11.73%		0.0138
2015	$72.38		$91.80		26.83%		0.0720
		Sum of returns			289.23%		4.1595		Sum of variances
		Average return (? )			72.31%		3		Sample divisor (n -1)
							1.3865		Variance
							1.18%		Standard deviation
							1.6300		Coefficient of Variation