FIN 350 Week 7 Complete
FIN 350 Week 7 Module 7 Practice Problems
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1. Do all work in Excel. Do not submit Word files or *.pdf files.
2. Submit a single spreadsheet file for this assignment. Do not submit multiple files.
3. Place each problem on a separate spreadsheet tab.
4. Label all inputs and outputs and highlight your final answer.
5. Follow the directions in the “Guidelines for Developing Spreadsheets.”
P8–9 Rate of return, standard deviation, and coefficient of variation 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
that Hi-Tech is an innovative market player. However, Mike realizes that any
time you consider a technology stock, risk is a major concern. The FIN 350 Week 7 rule he follows
is to include only securities with a coefficient of variation of returns below 0.90.
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
Year Beginning End
2012 $14.36 $21.55
2013 21.55 64.78
2014 64.78 72.38
2015 FIN350Week7Complete 72.38 91.80
a. Calculate the rate of return for each year, 2012 through 2015, for Hi-Tech stock.
b. Assume that each year’s return is here 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?
FIN 350 Grand Canyon Week 7 Complete Work
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