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Coefficient of Variation: Assessment of Risk Increasing

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Digital Technology wishes to determine its coefficient of variation as a company over time. The firm projects the following data (in millions of dollars):

Year
Profits?
Expected Value
Standard
Deviation
1 . . . . . . . . . . . . . $180 $ 62
3 . . . . . . . . . . . . . 240 104
6 . . . . . . . . . . . . . 300 166
9 . . . . . . . . . . . . . 400 292

a. Compute the coefficient of variation (V) for each time period.
b. Does the risk (V) appear to be increasing over a period of time? If so, why might this be the case?

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Solution Summary

The solution examines digital technology. The coefficient of variation and assessment of risk increasing is determined.

Solution Preview

Given that,
Year Expected Profit Standard Deviation Coefficient of variation
1 $180 $62 ...

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  • Bsc, Madras University
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