Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / The coefficient of variation for stock X is Possible Outcomes Probability Returns (%) Pessimistic 0
The coefficient of variation for stock X is Possible Outcomes Probability Returns (%) Pessimistic 0.25 5 0.45 Most likely 12 0.30 Optimistic 16 a. 0.3333 b. 0.1811 c. 0.3502 d. None of the above
Expected Return = 0.25 * 0.05 + 0.45 * 0.12 + 0.30 * 0.16
Expected Return = 0.1145 or 11.45%
Variance = 0.25 * (0.05 - 0.1145)^2 + 0.45 * (0.12 - 0.1145)^2 + 0.30 * (0.16 - 0.1145)^2
Variance = 0.001675
Standard Deviation = (0.001675)^(1/2)
Standard Deviation = 0.0409 or 4.09%
Coefficient of Variation = Standard Deviation / Expected Return
Coefficient of Variation = 4.09% / 11.45%
Coefficient of Variation = 0.3572
Therefore, correct option is “none of the above”
