Five investment alternatives have the following returns and standard deviations of returns.

Alternatives Returns:

Alternatives Expected Value Standard Deviation

A $ 2,070 $ 780

B 1,080 770

C 6,700 10,100

D 1,820 1,200

E 64,200 13,200

Calculate the coefficient of variation and rank the five alternatives from lowest risk to the highest risk by using the coefficient of variation. (Round your answers to 3 decimal places.)

Alternatives Coefficient of Variation Rank

A

B

C

D

E

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#18-

Tim Trepid is highly risk-averse while Mike Macho actually enjoys taking a risk.

Investments Returns:

Expected Value Standard

Deviation

Buy stocks $ 9,310 $ 5,760

Buy bonds 7,350 2,080

Buy commodity futures 17,400 25,400

Buy options 20,400 14,100

a-1. Compute the coefficients of variation. (Round your answers to 3 decimal places.)

Coefficient of Variation

Buy bonds

Buy stocks

Buy commodity futures

Buy options

a-2. Which one of the following four investments should Tim choose?

Buy bonds

Buy stocks

Buy commodity futures

Buy options

b. Which one of the four investments should Mike choose?

Buy bonds

Buy stocks

Buy commodity futures

Buy options

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#19

Mountain Ski Corp. was set up to take large risks and is willing to take the greatest risk possible. Lakeway Train Co. is more typical of the average corporation and is risk-averse.

Projects Returns:

Expected Value Standard

Deviation

A $ 298,000 $ 210,000

B 704,000 454,000

C 164,000 133,000

D 196,000 252,000

a-1. Compute the coefficients of variation. (Round your answers to 3 decimal places.)

a-2. Which projects should Mountain Ski Corp. choose?

Project A

Project B

Project D

Project C

b. Which one of the four projects should Lakeway Train Co. choose based on the same criteria of using the coefficient of variation?

Project C

Project B

Project D

Project A