When comparing different projects than standard deviation, Financial Management

Assignment Help:

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

Whenever we wish to compare the risk of investments that have different means, we make use of the coefficient of variation (CV).  The CV symbolizes the standard deviation's percentage of the mean.  For the reason that the CV is a ratio, it adjusts for variations in means, while the standard deviation doesn't.  Thus the CV supplies a standardized measure of the degree of risk that can be used to compare alternatives.

 


Related Discussions:- When comparing different projects than standard deviation

Dividends paper, one page paper reviewing "the Morgan Stanley Oil and Gas R...

one page paper reviewing "the Morgan Stanley Oil and Gas Report"

Inventory management, A computer products store stocks color graphics monit...

A computer products store stocks color graphics monitors, and the daily demand is normally distributed with a mean of 1.6 monitors and a standard deviation of 0.4 monitor. The lead

State the significance of the cost of capital, State the Significance of th...

State the Significance of the Cost of Capital It must be recognized at the outset that cost of capital is one of the most difficult and disputed topics in the finance theory.

Criticism of walter’s model, (i) No External Financing: - Walter' model pre...

(i) No External Financing: - Walter' model presume that the firm's investment are financed exclusively by retained earnings and no external financing is used. If it was therefore t

Attempt to pay cash dividends to common stockholders, Are there any legal f...

Are there any legal factors that could restrict a corporation in its attempt to pay cash dividends to common stockholders?  Explain. A firm may be lawfully restricted as to the

Securities analysis, 7. Bill Peters is the investment officer of a $60 mill...

7. Bill Peters is the investment officer of a $60 million pension fund. He has become concerned about the big price swings that have occurred lately in the fund’s fixed income sec

Secondary market, The secondary market is a market where the investor...

The secondary market is a market where the investor purchases a security from another investor rather than from the issuing corporation. This market is secondary

Premium, The amount by which the market price exceeds the conversion ...

The amount by which the market price exceeds the conversion value or the investment value called the premium. When expressed as a percentage, it is given by,

Define advantage and disadvantage of internal rate of return, What are the ...

What are the advantages and disadvantages of the internal rate of return method? The internal rate of return (IRR) method is a discounted cash flow method and a number expressed

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