Reference no: EM131972203

On January 1, 2012, Apple's stock was valued at $57.86 per share. If I purchased 100 shares on that day then my initial investment was worth $5,786. Five years later, on December 30, 2016 the stock was selling at $115.82 per share, therefore the stock is now worth $11,585.

According to the above chart, in 2012 the average dividend per share was $0.76, 2013 the average dividend per share was $1.69, 2014 the average dividend per share was $1.85, 2015 the average dividend per share was $2.03 and in 2016, the average dividend per share was $2.23 (Apple Inc., Morningstar, 2017). If we multiply each year's' average dividend per share by 100, and add up the totals.

This will give us $856 in investment income from stock dividends. To get the dollar return, we take the initial $5,786 invested on January 1, 2012 and subtract it from the December 30, 2016 stock now worth $11,585. The capital gain was $5,799 plus the $856 dividend paid gives us a dollar return of $6,655.

To obtain the percentage return, we divided our dollar return of $6,655 by our initial cash investment of $5,786 and multiply by 100. The percentage return on the stock is 115.02%, so therefore the 5-year average return on the stock is 23%.

Using the standard deviation of returns as the measure of risk, what is the volatility/risk of the stock?