Define coefficient of variation often a better risk measure, Financial Management

Assignment Help:

Why is the coefficient of variation often a better risk measure when comparing different projects than the standard deviation?

While we want to compare the risk of investments which have different means, we make use of the coefficient of variation (CV).  The CV denotes the standard deviation's percentage of the mean.  As the CV is a ratio, it adjusts for differences in means, whereas the standard deviation does not.  Hence the CV provides a standardized measure of the degree of risk that can be employed to compare alternatives.


Related Discussions:- Define coefficient of variation often a better risk measure

Budgeting and budgetary control, Budgeting and Budgetary Control: The n...

Budgeting and Budgetary Control: The next element of financial management is budgeting and budgetary control.  Budgeting is an integral part of the management accounting proces

Briefly explain tagna, TAGNA (a) Market effectiveness is commonly discu...

TAGNA (a) Market effectiveness is commonly discussed in terms of pricing efficiency. A stock market is expressed as efficient when share prices fully and fairly reflect relevan

Expalin the term mutual funds, Mutual funds Mutual funds pool resources...

Mutual funds Mutual funds pool resources from a lot of individuals and companies and invest these resources in diversified portfolios of bonds, stocks and money market instrume

Credit policy, What is the Credit Policy? Describe please.

What is the Credit Policy? Describe please.

Break even period, Break Even Period: It is also important to compare t...

Break Even Period: It is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments. Assume that the dividend p

Case, Which type of financing is appropriate to each firm?

Which type of financing is appropriate to each firm?

Explain economic order quantity, Q. Explain Economic Order Quantity? Ec...

Q. Explain Economic Order Quantity? Economic Order Quantity (EOQ):- Economic order quantity (EOQ) is that quantity of material for which each order must be placed. Purchasing l

Explain the three financial factors that influence the value, List and expl...

List and explain the three financial factors that influence the value of a business. The three factors that influence the value of a firm's stock price are timing , cash flow

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd