As a finance major student of the uwi oc, you have just landed a lucrative job as a financial
planner with first citizens investment services (fcis), a major financial services company in your
home country. your first assignment is to one of its major clients solar inc., invest in a high
end stock. solar inc.’s ceo is impressed with samsung’s performance over the years and have
asked you to explore the possibility of including a samsung stock in its current stock portfolio.
you have come up with the following historical information for samsung.
beginning
price ending price
dividend
paid per
year
2011 $68.20 $72.45 $45.00
2012 72.45 85.50 50.00
2013 85.50 98.74 58.00
2014 98.74 122.60 65.00
2015 122.60 136.85 70.00
a. based on the above information, you are to examine the annual rate of return, the average
return for the five year period (assuming that the probability of returns are equal for each
year), the standard deviation of returns for the past five years and the coefficient of
variations of returns. based on your calculations, what advice can you give to solar inc. if
the ceo has indicated that the company will only want to invest in a stock with a
coefficient of variation of returns below 0.75.