Calculate the rate of return for each year 2006 through 2009

Assignment Help Finance Basics
Reference no: EM131130790

Rate of return, standard deviation, coefficient of variation Mike is searching for a stock to include in his current stock portfolio. He is interested in Apple Inc.; he has been impressed with the company's computer products and believes Apple is an innovative market player. However, Mike realizes that any time you consider a so-called high-tech stock, risk is a major concern. The 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 2006 through 2009. Apple stock, being growth-oriented, did not pay any dividends during these 4 years.

 

a. Calculate the rate of return for each year, 2006 through 2009, for Apple 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. 

d. Eased 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 Apple stock in hisportfolio?

Reference no: EM131130790

Questions Cloud

Why would neoclassical economists be critical : Why would neoclassical economists be critical?
Who is responsible for it security : Identify and interview someone who is responsible for IT security (e.g., compliance, privacy, risk, or quality) - identify a health care facility where you would consider working in the field of health care informatics.
Brief description of what type of information given scenario : A brief statement of the potential utility and scientific merit of the information to be gathered by applying each of the qualitative methods above to the given scenario.
Explain the characteristics of line of credit : Explain the characteristics of a line of credit. What is it about these loans that make them by far the most popular type of short-term credit? When the economy is growing at a slow pace, it puts a damper on production and sales. This is due to the f..
Calculate the rate of return for each year 2006 through 2009 : Calculate the rate of return for each year, 2006 through 2009, for Apple stock. Assume that each year's return is equally probable and calculate the average return over this time period.
Considering change in its capital structure : Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. BEA is a zero-growth firm ..
Defined as the incremental profit divided by the investment : Schweser Satellites Inc. produces satellite earth stations that sell for $99,100.00 each. The firm's fixed costs, F, are $1.60 million, 65 earth stations are produced and sold each year, profits total $394,000.00; and the firm's assets (all equity fi..
Discuss how psychosocial stressors related to event interact : Select one (1) stressful event in your life. From the e-Activity, discuss how psychosocial stressors related to this event can interact with your behavioral risk factors and how this, in turn, can lead to chronic health problems.
What is the net present value of the stadium project : Fairfax Pizza sells pizza in Northern Virginia and is evaluating the stadium project, which would involve selling pizza in the baseball stadium for 2 years, starting today. Based on the following information, what is the net present value of the stad..

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the debt ratio before and after bank loan

Magic City Steel Enterprises has current assets of $160,000, total assets of $200,000, current liabilities of $85,000, and total liabilities of $100,000.

  What is the value at exercise of the option

When Allen waited an additional two weeks, the stock price climbed to $510. Allen, feeling a bit of anxiety, decides to exercise the option and realize some gains.-In exercising this option, what price is Allen getting the stock for?

  What are the incremental free cash flow associated

Daily marginal tax rate is 35%. You are forecasting incremental free cash flows for Daily enterprises. What are the incremental free cash flow associated with the new machine?

  Describe rationale of suggested investment strategy assume

suppose you are an investment advisor. you suggest your clients to buy stocks of small firms and stocks with high

  What is free cash flow for the current year

Class, XYZ Inc. has  the following info from the previous year: Net income = $4,000 NOPAT = $5,000 Total assets = $20,000 Total operating capital = $17,000 The information for the current year is: Net income = $8,000  ,nopat= $7,000 Tot..

  Optimal debt-to-asset ratio

Suppose that a company with total assets of $1,000 pays a corporate tax rate of 30%, and that its bankruptcy cost function is given by k(D) = 0.0005D2. What is the optimal debt-to-asset ratio, D/A, for this company?

  Describe the forms of business organizations

Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page is not included in the required page length.

  Assume a weighted average cost of capital

Advise the management as to the method of promotion to be adopted. You may assume a weighted average cost of capital in your analysis.

  Characteristic of service companies

Which of the following is characteristic of service companies?

  How long do you have to wait to become a millionaire

You have just won$140,000 from a lottery. If you invest all this amount in a tax-free money market fund earning8% compounded weekly, how long do you have to wait to become a millionaire? (Round your answer to two decimal places.)

  Evaluate bpp as a company using financial ratio analysis

Evaluate BPP as a company using financial ratio analysis

  Risks of incurring foreign tax in exporting goods

Assess the risks of incurring foreign tax in exporting goods from the U.S. Based on your assessment, propose a strategy to minimize or eliminate the foreign tax risk.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd