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.)
This solution shows how to calculate the expected value, variance, standard deviation and finally coefficient of variation in an Excel file.