In: Finance

P8-9 (similar to) |

Rate of return, standard deviation, coefficient of variation Personal Finance Problem 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

1.12.

Mike has obtained the following price information for the period

2015

through

2018:

LOADING...

. Hi-Tech stock, being growth-oriented, did not pay any dividends during these 4 years.a. Calculate the rate of return for each year,

2015

through

2018,

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 this 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?

a. The rate of return for year

2015

is

nothing%.

(Round to two decimal places.)

STOCK PRICE

YEAR BEGINNING END

2015 $14.94 $20.99

2016 $20.99 $63.49

2017 $63.49 $71.47

2018 $71.47 $91.95

As nothing was mentioned excel is used. If you need with
“statistical formula”, let me know, will do that also. Thank
you |

Rate of return, standard deviation, coefficient of
variation Personal Finance Problem
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...

Q1: Estimate the absolute standard deviation and the coefficient
of variation for the results of the following calculations. Round
to the correct number of significant figures. The numbers in
parenthesis are absolute standard deviations.
y =5.75(±0.03) + 0.833(±0.001) – 8.021(±0.001) = -1.4381
y =18.97(±0.04) + .0025(±0.0001) +2.29(± .08)= 21.2625
y =66.2(±.3) x 1.13(±.02) x10-17 =
7.4806x10-16
y =251(±1) x 860(±2) / 1.673(±.006) = 129025.70
y = [157(±6) - 59(±3)] / [1220(±1) + 77(±8)] =
7.5559x10-2
y = 1.97(±.01) / 243(±3)...

A sample has data values 27, 25, 20, 15, 30, 34, 28, 25. Calculate the range, interquartile range, variance, standard deviation and coefficient of variation.

Calculate the standard deviation and coefficient of variation
for each data set below, be sure to attach an Excel file to show
the work. Explain which of the two mentioned measures can more
accurately specify which of these two data sets has more
variability or dispersion in their data values, and why.
Data set 1= 11,12,13,14,15,16,17,18,19,20
Data set 2= 8,9,28,29,5,4,1,3,2,10

Please assist with finding the mean, standard deviation and
coefficient variation for the monthly profit of all the small,
medium, large and very larges stores listed below.
Store Size
Monthly Profit
VL
$9,984
VL
$8,387
VL
$9,679
VL
$21,591
VL
$8,197
VL
$20,930
M
$3,305
S
-$11,264
VL
$28,367
VL
$18,904
S
$18,934
VL
$11,845
M
$15,747
L
$23,107
VL
$18,461
VL
$2,035
L
$11,771
VL
$22,783
M
-$3,619
L
$13,326
VL
$19,157
VL
$16,047
L
$5,675
M
$11,720
L...

Compare and contrast:
(1) Describe the meaning of beta, standard deviation and
coefficient of variation.
(2) How each of them can be used to stock investment? For
example, how you select an investment using each of these three
measures? (this is an open question, the answer will be graded
based on student's understanding on each concept)

The coefficient of variation is a better measure of stand-alone
risk than standard deviation because it is a standardized measure
of risk per unit; it is calculated as the -Select-correlation
coefficientrisk premiumstandard deviationCorrect 5 of Item 1
divided by the expected return. The coefficient of variation shows
the risk per unit of return, so it provides a more meaningful risk
measure when the expected returns on two alternatives are not
-Select-identicaldifferentcorrelatedCorrect 6 of Item 1.
The Sharpe ratio compares the...

Problem 1. Stocks offer an expected rate of
return of 18%, with a standard deviation of 22%. Gold offers an
expected return of 10% with a standard deviation of 30%.
a) In light of the apparent inferiority of gold with respect to
both mean return and volatility, would anyone hold gold? If so,
demonstrate graphically why one would do so.
b) Given the data above, reanswer a) with the additional
assumption that the correlation coefficient between gold and stocks
equals...

Calculate the Mean, Median, Standard Deviation, Coefficient of
Variation and 95%
population mean confidence intervals for property prices of Houses
based on the following
grouping:
Proximity of the property to CBD
Note: Calculate above statistics for both “Up to 5KM” and “Between
5KM and
10KM”
Number of bedrooms
Note: Calculate above statistics for “One bedroom”, “Two bedrooms”
and “Three
bedrooms or more”
Number of bathrooms
Note: Calculate above statistics for “One bathroom”, “Two
bathrooms”, “Three
bathrooms or...

Problem 9.4 - variation – The Internal Rate of Return is the
interest rate that makes the present value (P) of a series of
future values equal to a specific dollar value. It is used in
engineering work to determine the financial viability of an
investment (eg., cost of purchasing a piece of equipment) by
looking at the annual revenue generated from the investment. The
future annual revenue values must be brought back to present time
by "discounting". For example,...

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