Question

If we assume that asset X has an expected return of 10 and a variance of 10, then its coefficient of variation is:

Answer 1

Answer: Its coefficient of variation = 0.316

Explanation:

The formula to find the coefficient of variations:

Coefficient of variation:
`(\frac{\sqrt{\text{variance}}}{\text{return}})`

Given: Asset X has

Variance = 10

Expected return = 10

then, coefficient of variation
`=(√(10))/(10)=(1)/(√(10))\approx0.316`

Hence, its coefficient of variation = 0.316