For a Potential Investment of $5,000,a Portfolio Has an EMV

question 121

Multiple Choice

For a potential investment of $5,000,a portfolio has an EMV of $1,000 and a standard deviation of $100.What is the coefficient of variation?

• A)10%
• B)20%
• C)50%
• D)100%

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Definitions:

Risk-Free Asset

An asset which is assumed to have no risk of financial loss and typically refers to government bonds or bills.

Risky Portfolio

A risky portfolio comprises investments that have a higher degree of risk, aiming for potentially higher rewards but with an increased possibility of losses.

Arithmetic Average

The sum of a series of numbers divided by the count of that series of numbers, commonly used to calculate the mean value of datasets.

Geometric Average

A method of calculating the average rate of return of a set of values by multiplying them together and taking the nth root, where n is the number of values, typically used for investment growth rates.