Two stocks have the following profile. Which stock offers a better risk return trade off (less risk per unit of return)?
Homework Answers
Coefficient of Variation = SD/ Expected Ret
CV 1 means 1 Unit of RIsk for 1 Unit of Ret
CV 1.5 means 1.5 Unit of RIsk for 1 Unit of Ret.
Thus ABC is better as it has lesser risk per unit of Ret.
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