Which of the following is correct regarding the coefficient of variation?
A) It measures the amount of standard deviation for each one percent of covariance.
B) It measures the amount of return achieved for each one percent of risk taken.
C) It measures the amount of risk taken for each one percent of return achieved.
D) None of the statements are correct.

Question

Quizplus · Accepted Answer

The coefficient of variation measures the amount of risk taken for each one percent of return achieved. It is calculated by dividing the standard deviation by the mean return of an investment. It is often used to compare the risk-adjusted returns of different investments with different levels of risk. Option A is incorrect because there is no covariance involved in the calculation of the coefficient of variation. Option B is incorrect because it assumes a fixed relationship between return and risk, which may not be true in all cases. Option D is incorrect because there is a correct statement related to the coefficient of variation.

Which of the Following Is Correct Regarding the Coefficient of Variation