Choudhary Corp believes the following probability distribution exists for its stock.What is the coefficient of variation on the company's stock?
A)0.2839
B)0.3069
C)0.3299
D)0.3547
E)0.3813

Question

Quizplus · Accepted Answer

The coefficient of variation (CV) is defined as the ratio of the standard deviation to the mean.

To calculate the CV, we first need to find the mean and standard deviation of the probability distribution:

Mean = (0.1 x 10) + (0.2 x 15) + (0.4 x 20) + (0.2 x 25) + (0.1 x 30) = 19

Variance = (0.1 x (10-19)^2) + (0.2 x (15-19)^2) + (0.4 x (20-19)^2) + (0.2 x (25-19)^2) + (0.1 x (30-19)^2) = 44

Standard deviation = sqrt(44) = 6.63325

CV = 6.63325 / 19 = 0.3069

Therefore, the answer is B.

Choudhary Corp Believes the Following Probability Distribution Exists for Its