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

Differences between indirect costs and direct costs, a) Variable costs: Rem...

a) Variable costs: Remuneration of flight attendants, Meals and drinks onboard, Fuel. Fixed costs: promotions and Advertising, Remuneration of administrative staff and Airport c

Operating cycle, Discuss the applicability of the operating cycle to poultr...

Discuss the applicability of the operating cycle to poultry business in Uganda(consider broilers)

Downgrade risk, Market participants' measure the default risk of an i...

Market participants' measure the default risk of an issue on the basis of the credit ratings that the credit rating agencies assign to the issues. Once rating is

Explain adjustments necessary to translate enterprise value, Explain the ad...

Explain the adjustments necessary to translate enterprise value to the total present value of common equity. To gain the value of the company's common stock add the value of th

Enumerate about the turnkey operations, Enumerate about the Turnkey operati...

Enumerate about the Turnkey operations An illustration of a turnkey business would be a franchise for example immediate brand, systems and product with exclusive territory. A t

Show repayment of principal, Your company is preparing to borrow $1,750,000...

Your company is preparing to borrow $1,750,000 on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will sho

Active management in practice, Constant Duration To ...

Constant Duration To improve a buy and hold strategy a constant average duration is imposed for the managed portfolio during the full interest rate cy

Generation of capital projects in the public sector, Question: (a) In t...

Question: (a) In the Strategic Planning Model, describe the various stages involved in the generation of capital projects in the public sector. (b) Outline the life cycle-co

Approximating the percentage price change using duration, Let us expr...

Let us express the process of calculating approximate percentage price change for a given change in yield and a given duration using the following formula:

Explain discounting or present value concept, Q. Explain Discounting or Pre...

Q. Explain Discounting or Present Value Concept? Discounting or Present Value Concept: - According to this concept rupee one of today is more valuable than rupee one a year lat

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