Variance, Mathematics

Assignment Help:

Variance

Consider the example of investment opportunities. The expected gains were Rs.114 and Rs.81 respectively. The fact is that an investor also looks at the dispersion before coming to a decision.

501_variance.png

The dispersion of opportunity 1 is far greater than that of opportunity 2. This might alarm the investor.

In this example, it might be worthwhile to compute the coefficient of variation.

For opportunity 1, this works out to be

= (42/114) x 100 = 36.84%

For opportunity 2, this works out to be

= (29.14/81) x 100  = 35.97%

The investor may regard both opportunities homogeneous in this regard and therefore find opportunity 1 more attractive (because of the higher expected returns).

 


Related Discussions:- Variance

Basic differential equation, Two 1000 liter tanks are containing salt water...

Two 1000 liter tanks are containing salt water. Tank 1 has 800 liters of water initially having 20 grams of salt dissolved in this and tank 2 has 1000 liters of water and initially

Percentage, 7 is what percent of 105?.

7 is what percent of 105?.

How to calculate probability of event, Q. How to calculate Probability of e...

Q. How to calculate Probability of event? Ans. What chance do I have to toss the coin and get a head? You might think 50-50, 50%. What about tossing it 5 times and getting

Determine the size of the proposed repayments, Five years ago a business bo...

Five years ago a business borrowed $100,000 agreeing to repay the principal and all accumulated interest at 8% pa compounded quarterly, 8 years from the loan date. Two years after

Geometry, find the value of 0 that makes cos 21 degrees = sin 0 statement t...

find the value of 0 that makes cos 21 degrees = sin 0 statement true.

Inside function and outside function, "Inside function" and "outside functi...

"Inside function" and "outside function : Generally we don't actually do all the composition stuff in using the Chain Rule. That can get little complexes and actually obscures the

What is trigonometric ratios, What is Trigonometric Ratios ? Trigonome...

What is Trigonometric Ratios ? Trigonometry, a branch of mathematics, is based on the ratios known as sine, cosine, and tangent. Trigonometric ratios apply only to right trian

Example of fraction, Example  Reduce 24/36 to its lowest terms. 2...

Example  Reduce 24/36 to its lowest terms. 24/36=12/18=6/9=2/3. In the first step we divide the numerator and the denominator by 2. The fraction gets reduced

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