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please solve it 2. Mike is searching for a stock to include in his current stock portfolio. He is interested in Hi Tech Inc.; he
please solve it
2. 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 2009 through 2012. Hi-Tech stock, being growth-oriented, did not pay any dividends during these 4 years. Stock price a. Calculate the rate of return for each year, 2009 through 2012, 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 these 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 Step by Step Solution
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