Question

Erickson Inc. is considering a capital budgeting project that has an expected return of 25% and a standard deviation of 30%. What is the project's coefficient of variation

Answer 1

The project's coefficient of variation is 1.2

Step-by-step explanation:

Coefficient of variation is the measure of variability relative to the mean.

Coefficient of variation = Standard Deviation / Average Return

Coefficient of variation = 0.30 / 0.25

Coefficient of variation = 1.2

Therefore, coefficient of variation is 1.2