If stock A has a coefficient of variation of 30% and stock B has a coefficient of variation of 35%.Based on this measure of risk, which stock would be considered riskier?
A)Stock A
B)The values are so close, they would be considered to have the same level of risk
C)Stock B
D)Risk cannot be measured by the coefficient of variation
E)There is not enough information to answer

Question

Quizplus · Accepted Answer

The coefficient of variation (CV) measures the relative variability of a stock's returns in relation to its mean. A higher CV indicates higher risk. Therefore, Stock B, with a CV of 35%, is considered riskier than Stock A, with a CV of 30%.

If Stock a Has a Coefficient of Variation of 30