Question
QUESTION TWO Sarah is searching for shares to include in her current share portfolio. She is interested in Avengers Ltd shares; she has been impressed
QUESTION TWO
Sarah is searching for shares to include in her current share portfolio. She is interested in Avengers Ltd shares; she has been impressed with the companys computer products and believes it is an innovative market player. However, Sarah realises that any time she considers a so-called Avengers share, risk is a major concern. The rule she follows is to include only securities with a coefficient of variation of returns below 0.60.
Sarah has obtained the following price information for the period from 2017 to 2021. Avengers Ltd, being growth-oriented, did not pay any dividends during these four years.
|
| Avengers Ltd Share Price | |
| Year | Beginning | End |
| 2017 - 2018 | $19.36 | $22.55 |
| 2018 - 2019 | 22.55 | 36.78 |
| 2019 - 2020 | 36.78 | 60.38 |
| 2020 - 2021 | 60.38 | 83.80 |
REQUIRED:
- Calculate the rate of return each year, from 2017 to 2021, for Avengers Ltd.
- Assume that each years return is equally probable and calculate the average return over this period.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Essentials of Accounting for Governmental and Not-for-Profit Organizations
Authors: Paul A. Copley
10th Edition
007352705X, 978-0073527055
