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?