Question

For example, a standard deviation of $5.00 on a $10.00 stock is considerably
different from a $5.00 standard deviation on a $40.00 stock. In this situation, a
coefficient of variation might provide insight into risk. Suppose stock X costs an
average of $32.00 per share and showed a standard deviation of $3.45 for the past 60
days. Suppose stock Y costs an average of $84.00 per share and showed a standard
deviation of $5.40 for the past 60 days. Use the coefficient of variation to determine
the variability for each stock.​

Answer 1

Answer:

Financial analysts like to use the standard deviation as a measure 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 stocks are considerably higher than the average price of others, allowing for the potential of a greater standard deviation of price.

For example, a standard deviation of $5.00 on a $10.00 stock is considerably different from a $5.00 standard deviation on a $40.00 stock. In this situation, a coefficient of variation might provide insight into risk. Suppose stock X costs an average of $32.00 per share and showed a standard deviation of $3.45 for the past 60 days. Suppose stock Y costs an average of $84.00 per share and showed a standard deviation of

Step-by-step explanation: