a . Calculate the rate of return for each year , 2012 through 2015 , 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 ?
P8 – 10 Assessing return and risk Swift Manufacturing must choose between two asset purchases . The annual rate of return and the related probabilities given in the following table summarize the firm ’ s analysis to this point .
Project 257 Project 432 Rate of return Probability Rate of return Probability −10 % 0.01 10 % 0.05 10 0.04 15 0.10 20 0.05 20 0.10 30 0.10 25 0.15 40 0.15 30 0.20 45 0.30 35 0.15 50 0.15 40 0.10 60 0.10 45 0.10 70 0.05 50 0.05