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Homework answers / question archive / A colleague advises Ahmad on a new bond with a substantial credit rating
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?
Coefficient of Variation = Standard Deviation / Mean ( Expected return)
Variance = Standard Deviation^(1/2)
= 24%^(1/2)
= 0.48989794855
Coefficient of variation = 0.48989794855 /0.05
= 9.797958971
Coefficient of Variation = 9.797958971 TImes
