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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 company's computer products and believes it is an innovative market player. However, Sarah realises that any time she considers a socalled Avengers share, risk is a major concern. The rule she follows is to include only securities with a coefcient 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. Aven-ers Ltd Share Price El 2017 - 2018 $19.36 $22.55 2019 - 2020 36.78 60.38 2020 - 2021 60.38 83.80 2018 - 2019 22.55 36.78 REQUIRED: a. Calculate the rate of return each year, from 201? to 2021, for Avengers Ltd. b. Assume that each year's return is equally probable and calculate the average return over this period. 0. Calculate the standard deviation of returns over the past four years and interpret the result. d. Based on parts b and c, determine the coefcient of variation of returns for the security. Considering this information about what should be Sarah's decision regarding the inclusion of Avengers Ltd in her portfolio
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