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Coefficient of Variation as a Measure of Risk in Investments

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1) Five investment alternatives have the attached returns and standard deviations of returns. Using the coefficient of variation, rank the five alternatives from lowest risk to highest risk. (Attachment 4.doc)

Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr Golff has developed the attached estimates of the cash flows for those properties.
a) Find the expected cash flow from each apartment complex.
b) What is the coefficient of variaion for each apartment complex?
c) Which apartment complex has more risk?

(Attachement 13.doc)

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Solution Summary

Answers to two questions where Coefficient of Variation is calculated to measure risk.

See Also This Related BrainMass Solution

Measure risk using standard deviation and coefficient of variation.

Objective: Measure risk using standard deviation and coefficient of variation.

You work for an large investment firm and recently wrote a position article on your firm's approach to investing for the small investor, titled "Investing is for the little guy". The article now appears on your company's website. It has, interestingly enough, generated e-mailed responses from potential clients and your firm is asking you to address some of their questions for a Frequently Asked Questions (FAQ) segment that will be posted to the site soon.
Specifically, some of the respondents have compared investing in the stock market as a no win situation and only the institutional investors can win. These respondents would like a response that further clarifies your firm's position regarding risk in light of these type of statements.

In your response, your company has asked that you address these questions building upon the risk-return concepts you identified in the position piece you wrote for the firm.

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