Probability Distribution and Coefficient of Variation
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Ripken Iron Works faces the following probability distribution:
State of the Probability of State Stock's Expected Return if
Economy Occurring this State Occurs
Boom 0.25 25%
Normal 0.50 15
Recession 0.25 5
What is the coefficient of variation on the company's stock? (Assume that the standard deviation is calculated using the population statistic.)
A. 0.06
B. 0.47
C. 0.54
D. 0.67
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Solution Summary
This solution shows how to calculate the expected value, variance, standard deviation and finally coefficient of variation in an Excel file.
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