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,which investment has the optimal coefficient of variation?
A) Investment A
B) Investment B
C) The investments are equal.
D) It cannot be determined.

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,which investment has the optimal coefficient of variation?
A) Investment A
B) Investment B
C) The investments are equal.
D) It cannot be determined.

Quizplus · Accepted Answer

The coefficient of variation (CV) is calculated as the standard deviation divided by the expected monetary value. For Investment A, CV = 100 / 900 = 0.111. For Investment B, CV = 50 / 600 = 0.083. Investment B has a lower CV, indicating a better risk-reward ratio.

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

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