[Anonymous]

Standard Deviation & Expected Return

Can anyone provide the solution/explanation for this problem? Thank you very much!

[nolan7120]

Ha I saw that same problem somewhere and it seemed a little off to me. All i know is the Std Dev / Exp Ret equals the coefficient of variation, which is a measurement of volatility. The lower the number, the less the volatility. The problems that i did in the Wiley book never gave numbers that high though. They were all under 1.

FAR (6/9/16) - 81

[sancasuki]

The best investment is where you get a high return but it's not risky. Usually they go together though. The more the risk, the higher the return. Standard deviation is the risk. For this problem you can divide the 2nd column by the 1st column to compare. D gives you the most return for the amount of risk that it has.

20/25= 0.8
18/20= 0.9
8/12= 0.67
10/10= 1.0

[Author]

Replies