Finandial analysts like to use the standard deviation as a measare of risk for a

Question

Finandial analysts like to use the standard deviation as a measare of risk for a stock. The greater the deviation in a stock price over time, the more risky it is to invest in the stock. However, the average prices of some stodks ane considerably stockIn this st et on coemcert ofvanabo m ght pro de ins ght torsk Suppose stock Xcosts an average of S3500 per share and showed bstandard devaton of $3.05 for the past 60 des suppose stock Y cests anaverage of 581 per share and showed a standard devistion of $5.65 for the past 60 days, Use the coemient of variation to determine the vaniabeity for each stock (Round your answers to 2 decimal places.) Coemoent of vanation for ockx. Coefficient of variation for stock Y Stock has a greater reacive varisby.

Explanation / Answer

COV for stock X =(std deviaiton/mean)*100 =(3.05/35)*100 =8.71%

COV for stock Y =(std deviaiton/mean)*100 =(5.65/81)*100 =6.98%

stock X has a greater relative variability.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.