five investment alternatives have the following returns and standard deviations

Question

five investment alternatives have the following returns and standard deviations of returns.
                          
                            Returns:         standard
alternatives.      expected.      deviation
                               value

A.                           1,330.             340
B.                              910.            1210
C.                            14,900.          7100
D.                             1,230.            1,290
E.                            68,300.          20,600

calculate the coefficient of variation and ring the five Alternatives from lowest to highest Risk by using the coefficient of variation

alternatives.    coefficient.            rank
                           of variation.     A, E,C,D, B
A
B
C
D
E

Explanation / Answer

Coefficient of variation = standard deviation/expected returns

CoV of A = 340/1330 = 0.256

CoV of B = 1210/910 = 1.33

CoV of C = 7100/14900 = 0.477

CoV of D = 1290/1230 = 1.049

CoV of E = 20600/68300 = 0.3016

Lowest to highest in terms of risk A<E<C<D<B

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