Question

Assume you are risk-averse and have the following three choices. Expected Value Standard Deviation A $ 2,470 $ 900 B 2,890 1,400 C 1,710 770 a. Compute the coefficient of variation for each. (Round your answers to 3 decimal places.)

Answer 1

The coefficient of variation for choice A is 0.364. For choice B, it is 0.484. For choice C, it is 0.450.

Step-by-step explanation:

Coefficient of variation (CV) measures the dispersion of of data points around the mean. It is calculated as the ratio of the standard deviation to the expected value.

Coefficient of variation = Standard Deviation / Expected Value

We can, therefore, apply the above formula to the three choices given in the question: A, B and C. The calculations are as follows.

Coefficient of variation for choice A = 900 / 2470 = 0.364

Coefficient of variation for choice B = 1400 / 2890 = 0.484

Coefficient of variation for choice C = 770 / 1710 = 0.450

Answer 2

Description Coefficient of variation

A 36.437 %

B 48.443 %

C 45.029 %

Step-by-step explanation:

Formula is

Coefficient of variation = standard deviation / expected value