A colleague advises Ahmad on a new bond with a substantial credit rating

Finance Aug 12, 2020

A colleague advises Ahmad on a new bond with a substantial credit rating. It has variance of 24% and an expected return of 5%. What is the coefficient of variation, CV?

Expert Solution

ASSUMING NO TYPO IN THE QUESTION

We see that the coefficient of variation=sqrt(variance)/expected return=sqrt(24%)/5%=9.797958971

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