Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The expected annual returns are 12% for investment 1 and 14% for investment 2. The standard deviation of investment return is 11%, the second investment's

The expected annual returns are 12% for investment 1 and 14% for investment 2. The standard deviation of investment return is 11%, the second investment's return has a standard deviation of 5%. Which investment is less risky based solely on standard deviation? Which investment is less likely based on coefficient of variation? Which is a better measure given the expected returns of the two investments are not the same?

WHich investment is less risky based on standard deviation?

_ (Investment 1 or 2) is less risky because the standard deviation is_ (lower or higher)

Which investment is less risky based on coefficient of variation?

_ (investment 1 or 2) is less risky because its coefficient of variation is_ (lower or Higher).

WHich is a better measure that the expected returns on two investments are not the same?

Coeffiecient of variation or Standard deviation.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investing In Fixed Income Securities Understanding The Bond Market

Authors: Gary Strumeyer

1st Edition

0471465127, 9780471465126

More Books

Students also viewed these Finance questions

Question

Appreciate the services that consultants provide

Answered: 1 week ago

Question

Know about the different kinds of consultants

Answered: 1 week ago