Asset a Has a Coefficient of Variation of 1

question 14

Multiple Choice

Asset A has a coefficient of variation of 1.2 and asset B has a coefficient of variation of 1.0. Based on this information, an individual would choose asset ____ if he or she wishes to maximize return for a given level of risk.

• A) A
• B) B
• C) A & B in equal proportions
• D) A & B in proportions of 1.2 to 1.0

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Definitions:

Financing

The process of providing funds for business activities, making purchases, or investing, through various means such as loans, equity, or bonds.

Employee Stock Options

A form of compensation provided to employees, giving them the right to buy the company's stock at a set price after a certain period.

Ownership Stake

The percentage of a company's shares owned by an individual or entity, representing a portion of the company's equity.

Align

To adjust or arrange something in a straight line or in correct relative positions.