Analysis of portfolio returns over a 20-year period showed the statistics below (a) Calculate and compare the coefficients of variation. (b) Why would we use a coefficient of variation? Why not just compare the standard deviations? (c) What do the data tell you about risk and return?
Comparative Returns on Four Types of Investments | |||
Investment | Mean Return | Standard Deviation | Coefficient of Variation |
Venture funds | 19.2 | 14.0 |
|
Common stocks | 15.6 | 14.0 |
|
Real estate | 11.5 | 16.8 |
|
Federal short-term paper | 6.7 | 1.9 | |
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