The coefficient of variation is calculated to help correlate the standard deviation and the relative expected value of an investment, which makes it easier to compare different sized investments.
The coefficient of variation measures the amount of risk per unit of return.

Question

Quizplus · Accepted Answer

The statement is correct. The coefficient of variation is a measure of risk relative to the expected return or average, and is calculated by dividing the standard deviation by the mean. It is commonly used in investing and finance to compare the risk arising from two different investments with different expected returns.

The Coefficient of Variation Is Calculated to Help Correlate the Standard