If the variance for Stock A is greater than the variance for Stock B, then the coefficient of variation for Stock A:
A) is greater than the coefficient of variation for Stock B
B) is less than the coefficient of variation for Stock B
C) is the same as the coefficient of variation for stock b
D) cannot be determined by this information

Question

Quizplus · Accepted Answer

The coefficient of variation is a measure of relative variability that is calculated as the standard deviation divided by the mean. Since the variance only tells us about the spread of a stock's returns and not about its mean return, we cannot determine whether the coefficient of variation for Stock A is greater than, less than, or the same as that for Stock B without additional information about their means.

If the Variance for Stock a Is Greater Than the Variance