Question

(d) What is the range in Cenovas Energy’s stock price? [2 mark]

ANSWER:_____________________

(e) Calculate the coefficient of variation for each stock. [2 marks]

TD Bank: Cenovas Energy:

(f) Which stock is riskier? Use one of the 5 measures above. Explain why it is most

appropriate.

Answer 1

ANSWER::

Question (d)

Range in Cenovas Energy’s stock price = Highest Price - lowest price

= 14.50 - 8.75

= 5.75

So Range in Cenovas Energy’s stock price = $5.75

Question (e)

Coefficient of variation = (Standard deviation / Mean)

Coefficient of variation for TD bank = (6.00 / 75.00)

= 0.08 or 8%

Coefficient of variation for Cenovas Energy = (2.10017 / 12)

= 0.175014 or 17.5014%

Question (f)

The higher the coefficient of variation, the more riskier the stock is

Here the coefficient of variation of Cenovas Energy is more than the Coefficient of variation for TD bank

So Cenovas Energy is the riskier stock

Coefficient of variation is the appropriate measure for comparing risks here because the Means of both the stocks have a huge difference between them. Using coefficient of variation will normalize the standard deviation with respect to the mean

So coefficent of variation is the appropriate measure here.

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