Mathematics · Statistical Measures
An investor's research indicates that Stock A has a mean monthly return of 10% with a standard deviation of 2%, while Stock B has a mean monthly return of 8% with a standard deviation of 1%. Based strictly on the Coefficient of Variation (CV), which option correctly identifies the stock with the lower relative risk?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Stock B, because its return is lower than Stock A
- 2Stock A, because its absolute standard deviation is higher
- 3Stock B, because its Coefficient of Variation is 0.125✓
- 4Stock A, because its Coefficient of Variation is 0.20
Correct answer
Stock B, because its Coefficient of Variation is 0.125
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