--%>
Assignment Help - homework help

Why coefficient of variation is better risk measure

Why is the coefficient of variation frequently a better risk measure while comparing different projects than the standard deviation?
Whenever we desire to compare the risk of investments which have different means, we employ the coefficient of variation (CV). The CV reveals the standard deviation's percentage of the mean. Since the CV is a ratio, it adjusts for differences in means, whereas the standard deviation does not. So the CV provides a standardized measure of the degree of risk which can be utilized to compare alternatives.

   Related Questions in Finance Basics

  • Q : Explain intermediation Explain

    Explain intermediation.The financial system makes it achievable for surplus and deficit economic units to come together, exchanging funds for securities, to their mutual profit. While funds flow from surplus economic units to a financial institu

    		•
  • Q : Meaning of invisible hand Normal 0

    Normal 0 false false

  • Q : What are Federal Funds Federal Funds :

    Federal Funds: For legal basis budgeting purposes, categorization of funds into which the money received in trust from an agency of the federal government will be deposited and finished by a state department in accordance with state and/or federal rul

    		•
  • Q : Explain State-Mandated Local Program

    State-Mandated Local Program: The state compensations to local governments for the cost of activities needed by legislative and executive acts. This reimbursement necessity was established, Statutes of 1972 (SB 90) and further approved by the adoption

    		•
  • Q : Retiring an internally held debt and

    Normal 0 false false

  • Q : What is Bond Funds Bond Funds : For

    Bond Funds: For legal basis budgeting aims, funds utilized to account for the receipt and disbursement of non-self liquidating common obligation bond proceeds. Such funds do not account for the debt retirement as the liability made by the sale of bond

    		•
  • Q : What is Out-of-State Travel blanket

    Out-of-State Travel (OST) blanket: The request by a state agency for Governor’s Office approval of the proposed out-of-state trips to be taken by that agency’s personnel throughout the fiscal year.

    		•
  • Q : Describe working capital Describe

    Describe working capital? Working capital contains the current assets of the firm.

    		•
  • Q : Describe trustworthy collateral from

    Describe trustworthy collateral from the lenders' perspective? Describe whether accounts receivable and inventory are trustworthy collateral. Assets which are readily marketable, of stable value, and not likely to "disappear" make for trustwort

    		•
  • Q : What is Department Department: The

    Department: The governmental organization, generally belonging to the third level of the state organizational hierarchy as stated in the Uniform Codes Manual.

    		•