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McLeod Inc. is considering an investment that has an expected return of 8% and a standard deviation of 10%. What is the investment's coefficient of variation?

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Zviko

Answer:

the investment's coefficient of variation is 1.25.

Explanation:

The  coefficient of variation relates the units of return to the units of risk. It expresses the unit of risk per 1% of return as follows :

Coefficient of Variation = Standard Deviation ÷ Return

Therefore,

Coefficient of Variation = 10 ÷ 8

                                       = 1.25

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