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

Determine the number of blue balls in the bag, A bag contains 5 red balls a...

A bag contains 5 red balls and some blue balls. If the probability of drawing a blue ball is double that of a red ball , determine the number of blue balls in the bag.

Lognormal distribution, The Lognormal Distribution If ln(X) is a normal...

The Lognormal Distribution If ln(X) is a normally distributed random variable, then X is said to be a lognormal variable. If P1, P2, P3, ... are the prices of a scrip in per

Slope, #question.Find the slope of the line that passes through (7, 3) and ...

#question.Find the slope of the line that passes through (7, 3) and (9, 6). Simplify your answer and write it as a proper fraction, improper fraction, or integer. .

Develop a linear program to investment advisory firm, An investment advisor...

An investment advisory firm manages funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client's portfolio to be invested

Travel time, you are driving on a freeway to a tour that is 500 kilometers ...

you are driving on a freeway to a tour that is 500 kilometers from your home. after 30 minutes , you pass a freeway exit that you know is 50 kilometer from your home. assuming that

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