Determine the coefficient of variation for rate of return

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Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:

Price                    Rate of Return                              Probability

$16                         -20%                                               0.25

20                             0%                                                0.30

24                          +20%                                                0.25

28                           +40%                                                0.20

Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the coefficient of variation for the rate of return on Phoenix stock.

 

Reference no: EM13268627

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