Question

We need to compare volatility of multiple assets. As the assets have different variation ranges, e.g. a big stock versus a penny stock, it is useful to look at the coefficient of variation, not the standard deviation, as a measure of volatility. We have the following population data: Mean ($) 0.48 175.93 286.47 Standard deviation ($) 0.09 34.72 63.08 (a)[2] Give an equation for the coefficient of variation in percentage terms. (b)[6] Find volatility of the three assets. Use two decimals for percentages, e.g. 23.76%. (c)[2] Which asset is the least volatile? Which asset is the most volatile?

Answer 1

Check the explanation

Explanation:

a)

the formula is given by,

c.v.=
`(\sigma)/(\mu)* 100`

where is standard deviation and is mean of the given data.

b)for asse A,

c.v.=
`(\sigma)/(\mu)* 100` = 0.03 5 , 100 0,30 x 0.30 = 10%

for asse B,

c.v.=
`(\sigma)/(\mu)* 100` = 1.50 x 100 26005 × 100 =8.27 %

for asset C,

c.v.=
`(\sigma)/(\mu)* 100` = 18.70 × 100 =10.71%

c)since, c.v. of asset B is least, it is least volatile and c.v. of asset is most, it is most volatile.