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Rate of return, standard deviation, coefficient of variation Personal Finance Problem Mike is searching for a stock tc include in his current stock portfolio. He
Rate of return, standard deviation, coefficient of variation Personal Finance Problem Mike is searching for a stock tc include in his current stock portfolio. He is interested in Hi-Tech Inc.; he has been impressed with the company's compute) 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 c returns below 1.02. 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 these 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. (Treat this 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
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