Five investment alternatives have the following returns and standard deviations of returns. Alternatives Returns: Expected Value Standard Deviation A $ 1,110 $ 1,270 B 3,970 820 C 3,970 1,330 D 5,790 2,650 E 12,500 7,350 Calculate the coefficient of...

60.1K

Verified Solution

Question

Finance

Five investment alternatives have the following returns andstandard deviations of returns.

Alternatives Returns:
Expected Value Standard
Deviation
A $ 1,110 $ 1,270
B 3,970 820
C 3,970 1,330
D 5,790 2,650
E 12,500 7,350

Calculate the coefficient of variation and rank the fivealternatives from lowest risk to the highest risk by using thecoefficient of variation. (Round your answers to 3 decimalplaces.)

Answer & Explanation Solved by verified expert

4.0 Ratings (626 Votes)

Solution The coefficient of variation is a measure of risk per unit of return or reward The formula for calculating the coefficient of variation is Standard Deviation Return Thus the 1 Coefficient of variation for Investment Alternative A As per the Information given in the question we have Return 1110 and Standard Deviation 1270 Applying the above values in See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Five investment alternatives have the following returns andstandard deviations of returns. AlternativesReturns:Expected ValueStandardDeviationA$1,110$1,270B3,970820C3,9701,330D5,7902,650E12,5007,350 Calculate the coefficient of variation and rank the fivealternatives from lowest risk to the highest risk by using thecoefficient of variation. (Round your answers to 3 decimalplaces.)

Alternatives	Returns: Expected Value		Standard Deviation
A	$	1,110	$	1,270
B		3,970		820
C		3,970		1,330
D		5,790		2,650
E		12,500		7,350