Question
In: Finance
Miriam’s Investment Choices: Investment B Investment A Investment B Probability Returns Probability Returns 0.30 11.0% 0.40...
Miriam’s Investment Choices: Investment B
|
Investment A |
Investment B |
||
|
Probability |
Returns |
Probability |
Returns |
|
0.30 |
11.0% |
0.40 |
15.0% |
|
0.40 |
15.0% |
0.25 |
20.0% |
|
0.30 |
19.0% |
0.15 |
18.0% |
|
0.20 |
8.0% |
||
Calculate the coefficient of variation for investment B
Solutions
Expert Solution
| R | P | |
| Return % | Probability | P X R |
| 15 | 0.40 | 6.00 |
| 20 | 0.25 | 5.00 |
| 18 | 0.15 | 2.70 |
| 8 | 0.20 | 1.60 |
| Expected return | 15.30 | |
| R | P | D | D2 | P X D2 |
| Return % | Probability | Return - Expected return | Square of D | P X Square of D |
| 15 | 0.40 | -0.300 | 0.0900 | 0.03600 |
| 20 | 0.25 | 4.700 | 22.0900 | 5.52250 |
| 18 | 0.15 | 2.700 | 7.2900 | 1.09350 |
| 8 | 0.20 | -7.300 | 53.2900 | 10.65800 |
| Variance | 17.31000 | |||
| Standard Deviation = Square root of Variance= Square root of 17.31000 = | 4.16052881254 | |||
Coefficient of variation = Standard deviation / Expected return or average return X 100,
= 4.16052881254294 / 15.30 X 100 = 27.1929987747905,
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Thank you,…
jeff jeffy answered 3 years agoRelated Solutions
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