Because of differences in the expected returns on different investments, the standard deviation is not always an adequate measure of risk.However, the coefficient of variation adjusts for differences in expected returns and thus allows investors to make better comparisons of investments' stand-alone risk.

Question

Quizplus · Accepted Answer

The statement is true. The coefficient of variation is a useful tool for comparing the risk of different investments because it adjusts for differences in expected returns, allowing investors to make more informed decisions.

Because of Differences in the Expected Returns on Different Investments