Question

A stock has a variance of 0.02468, a current price of $28 a share, and an average rate of return of 14.4 percent. How is the coefficient of variation (CoV) computed

Answer 1

Answer: 1.09

Explanation:

Coefficient of Variation (CoV) is calculated by the formula;

= $\frac{Standard Deviation}{Expected Return}$

The Variance is given. Standard Deviation is;

= √Variance

= √0.02468

= 0.15709869509

Coefficient of Variation is therefore;

=  $\frac{0.15709869509}{0.144}$

= 1.09096316037

= 1.09