anufacturing has isolated four alternatives for meeting for increased production capacity. The following summarized datea gathered relative to each of these alternatives. Alternative Expected Return Standard Deviation A 21% 8.3% B 25% 8.8% C 16% 6.1% D 13% 4.4% Calculate the coefficient of variation for each alternative If the firm wishes to minimize risk, which alternative do you recommend?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Metal manufacturing has isolated four alternatives for meeting for increased production capacity. The following summarized datea gathered relative to each of these alternatives.
| Alternative | Expected Return | Standard Deviation |
| A | 21% | 8.3% |
| B | 25% | 8.8% |
| C | 16% | 6.1% |
| D | 13% | 4.4% |
Calculate the coefficient of variation for each alternative
If the firm wishes to minimize risk, which alternative do you recommend?
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