Calculate the standard deviation of returns over three years

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Reference no: EM132064655

You are searching for a stock to add to your current portfolio. You are interested in? Blackhawks, Inc. ? but are focused on elevated risk. You only buy securities with a coefficient of variation of returns below 1.0.   You have obtained the following price information and dividend information (10 points)….round to nearest one decimal place:

Year                      Starting Price             Ending price             Quarterly Dividend

      1                      $54.00                        $66.00                        $0.375

      2                      $66.00                        $70.60                        $0.500

      3                      $70.60                        $71.54                        $1.000

a. Calculate the rate of return for each? year, 1 through 3

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 3 years.

d. Based on b and c determine the coefficient of variation of returns for the security.

e. Does an investment in this stock fall within the parameters of your investment policy?

Reference no: EM132064655

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