An investment with a $500 standard deviation and a $5,000 expected value has a higher risk than an investment with a $4,000 standard deviation and a $50,000 expected value.

Question

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The risk of an investment is often measured by the coefficient of variation, which is the standard deviation divided by the expected value. The first investment has a higher coefficient of variation (0.1) compared to the second investment (0.08), indicating higher relative risk.

An Investment with a $500 Standard Deviation and a $5,000