Instruction 17-4
The following information is from two investment opportunities.
$$\begin{array} { l c c }
& A & B\
\text { Expectedmonetary } & \$ 900 & \$ 600 \
\text { value }\
\text { standarddeviation } & 100 & 50
\end{array}$$
-Referring to Instruction 17-4,what is the coefficient of variation for investment A?
A) 5.0%
B) 11.1%
C) 8.3%
D) 90.0%

Question

Instruction 17-4
The following information is from two investment opportunities.
 $$\begin{array} { l c c } 
& A & B\
\text { Expectedmonetary }   & \$ 900 & \$ 600 \
\text { value }\
\text { standarddeviation } & 100 & 50 
\end{array}$$
-Referring to Instruction 17-4,what is the coefficient of variation for investment A?
A) 5.0%
B) 11.1%
C) 8.3%
D) 90.0%

Quizplus · Accepted Answer

The coefficient of variation is calculated by dividing the standard deviation by the mean and expressing the result as a percentage. For investment A, the coefficient of variation is (10% / 90%) x 100% = 11.1%. This indicates that investment A has a relatively high level of risk compared to its potential return. Therefore, the best choice would be investment B, which has a higher expected return with a lower level of risk as indicated by its lower coefficient of variation of 5.6%.

Instruction 17-4 the Following Information Is from Two Investment Opportunities

Instruction 17-4
the Following Information Is from Two Investment Opportunities