Computation of Coefficient of Variation
Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The data gathered relative to each of these alternatives are summarized in the following table:
Alternative
|
Expected Return
|
Standard deviation
|
A
|
12%
|
.29
|
B
|
12.5
|
.032
|
C
|
13
|
.035
|
D
|
12.8
|
.030
|
1. Calculate the coefficient of variation for each alternative.
2. Which alternative do you recommend? Why?