Question

What is the coefficient variation of the following possible returns and their likelihoods? Note the same table applies for Questions 12, 13, and 14 Scenarios Probability Return Best Case 30% 10% Average Case 40% 12% Worst Case 30% 14% 0.871 0.129 0.256 0.546

Answer 1

Return
Scenario	Probability	Return%	=rate of return% * probability	Actual return -expected return(A)%	(A)^2* probability
Best	0.3	10	3	-2	0.00012
Average	0.4	12	4.8	0	0
Worst	0.3	14	4.2	2	0.00012
	Expected return %=	sum of weighted return =	12	Sum=Variance Return=	0.00024
			Standard deviation of Return%	=(Variance)^(1/2)	1.55
			Coefficient of variation=	Std. dev./return=	0.1292