Question

In choosing between two investments, if one has the higher expected return but the other has the lower standard deviation, we use another measure of risk called _____________. To obtain this measure we divide the _____________ by the ____________. This measure shows the amount of_____________ per unit of return and provides a more useful risk measure when the expected returns on two alternatives are different.

Answer 1

Based on the information given in the paragraph above, the measures that fill in the blanks in order are:

• Coefficient of Variation
• Standard deviation
• Expected return
• Risk

When we have an investment with a higher expected return and a higher standard deviation than another investment, we can then base our decision on the amount of risk that we incur per return of the investment.

This measure is called the coefficient of variation and it is calculated thus:

= Standard deviation / Expected return

This will then show you the risk incurred per unit of return. The investment with the lower coefficient is the better one.

In choosing between two investments, if one has the higher expected return but the other has the lower standard deviation, we use another measure of risk called Coefficient of Variation. To obtain this measure we divide the Standard deviation by the Expected return. This measure shows the amount of Risk per unit of return...

Find out more at brainly.com/question/24616534.