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

Put option, Put Option This is a right which is granted in exchange for...

Put Option This is a right which is granted in exchange for an agreed-upon sum to sell property. Options are mostly used frequently in securities transactions it also used stoc

Explain how the special drawing rights (sdr) is constructed, Explain how th...

Explain how the special drawing rights (SDR) is constructed. Also, discuss the circumstances under which the SDR was created. Answer:   SDR was made by the IMF in 1970 as a new r

Example on modigliani and miller approach, Q. Example On modigliani and mil...

Q. Example On modigliani and miller approach? The subsequent is the data regarding two companies X and Y belonging to the same risk class: Company X

Determine the term- profit before taxation and interest, Determine the term...

Determine the term- Profit before taxation and interest Profit before taxation and interest can also be used here in addition to profit for the period. Whichever figure is tak

State the impact on profitability of the company, State the impact on profi...

State the impact on profitability of the company Everything you do has an impact on profitability of the company(including drinking ten cups of coffee in a day!). So if you wan

Describe factors to analyze a company position, Q. Describe Factors to Anal...

Q. Describe Factors to Analyze a Company position? - Venture capitalists may be involved in the business because of its significant growth but poorly structured finance. An equ

Define the meaning of overtrading, Define the meaning of Overtrading Wh...

Define the meaning of Overtrading When  a  company  is  trading  at  a  very  fast  pace,  it  would be  generating  sales  on  credit  with  speed, so have a large volume of t

Why is capital budgeting analysis so important to the firm, Why is capital ...

Why is capital budgeting analysis so important to the firm? The major goal of the financial manager is to maximize shareholder wealth. Capital investments along with positive N

How amount of financing affecting cost of capital, Q. How Amount of financi...

Q. How Amount of financing affecting cost of capital? Amount of financing as the financing require of the firm become larger , the weighted cost of capital increased several re

Evaluate the critical path, a) Definitions of EST and LFT needed in order t...

a) Definitions of EST and LFT needed in order to explain the differentiation between the terms. The EST of each activity will depend on the LFT of all preceding activities. b) S

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