Stocks A B and C display the following parameters: Expected Return A  15%         Variance 9%2 Expected Return B  20%         Variance 16%2 Expected Return C  25%         Variance 4%2 If a rational investor has to choose two securities between the above, what would be his choice? (Hint: Calculate Coefficient of Variation)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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  1. Stocks A B and C display the following parameters:

Expected Return A  15%         Variance 9%2

Expected Return B  20%         Variance 16%2

Expected Return C  25%         Variance 4%2

If a rational investor has to choose two securities between the above, what would be his choice?

(Hint: Calculate Coefficient of Variation)

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