Coefficient of variation measures the risk of investment

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Stocks A, B, and C have expected returns of 14 percent, 14 percent, and 11 percent, respectively, while their standard deviations are 48 percent, 29 percent, and 29 percent, respectively. If you were considering the purchase of each of these stocks as the only holding in your portfolio and the risk-free rate is 0 percent, which stock should you choose? (Hint: the Coefficient of Variation (CV) measures the risk of an investment for each 1% of expected return; in other words, the higher the CV, the greater the risk.) (Round answer to 2 decimal places, e.g. 15.25.)

Coefficient of variation of Stock A

Coefficient of variation of Stock B

Coefficient of variation of Stock C

Which stock would you choose?

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Reference no: EM131051174

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