McLeod Inc. is considering an investment that has an expected return of 8% and a standard deviation of 10%. What is the investme

Question

4 years ago

6

nt's coefficient of variation?

1 answer:

Rudik [331] · Answer 1 · 2022-02-25T22:54:17+03:00

Answer:

the investment's coefficient of variation is 1.25.

Explanation:

The coefficient of variation relates the units of return to the units of risk. It expresses the unit of risk per 1% of return as follows :

<em>Coefficient of Variation = Standard Deviation ÷ Return</em>

Therefore,

Coefficient of Variation = 10 ÷ 8

= 1.25