Coefficient of variation is used to identify an effect of__________?
Correct answer: D. Both A and B
- A. Risk
- B. Return
- C. Deviation
- D. Both A and B
Explanation
The coefficient of variation compares risk, measured by standard deviation, with return, usually as standard deviation divided by expected return. It therefore helps assess both risk and return, especially when comparing investments with different expected returns.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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