Assume you are risk-averse and have the following three choices. Expected Standa

ID: 2822284 • Letter: A

Question

Assume you are risk-averse and have the following three choices.

Expected Standard

Value Deviation

A $ 2,010 $ 1,700

B 2,420 1340

C 2,180 1,490

Compute the coefficient of variation for each. (Round your answers to 3 decimal places.)

Coefficient of Variation

A _______

B_______

C_______

Which project will you select? Project A Project B or Project C ?

coefficient of variation=Standard deviation/Expected value

Hence since individual is risk averse;choice having lowest coefficient of variation must be selected ie Project B.

coefficient of variation A (1700/2010)=0.846 B (1340/2420)=0.554 C (1490/2180)=0.683(Approx).

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