Sayers purchased a stock with a coefficient of variation equal to 0.125. The expected return on the stock is 20 percent. What is the variance of the stock?
A) 0.000625
B) 0.025000
C) 0.625000
D) 0.790500

Question

Quizplus · Accepted Answer

The coefficient of variation (CV) is the ratio of the standard deviation to the expected return. Given CV = 0.125 and expected return = 0.20, the standard deviation = 0.125 * 0.20 = 0.025. The variance is the square of the standard deviation: 0.025^2 = 0.000625.

Sayers Purchased a Stock with a Coefficient of Variation Equal