Respuesta :
Answer:
Idol Staff, Poker-R-Us, Rail Haul.
Explanation:
To rank the three stocks according to their level of total risk, highest to lowest.
We shall use the co-efficient of variation (COV) to measure the risk level of the three stocks.
[tex]COV=\frac{\text{Standard deviation}}{\text{Average return(mean)}}[/tex]
a. Co-efficient of variation of Rail Haul :
Average return = 12% and Standard deviation = 25%
= [tex]\frac{25}{12}[/tex]
= 2.08
Hence COV of Rail Haul is 2.08
b. compute the co-efficient of variation of Idol Staff :
Average return = 15% and Standard deviation = 35%
= [tex]\frac{35}{15}[/tex]
= 2.33
Hence COV of Idol Staff is 2.33
c. compute the co-efficient of variation of Poker-R-Us :
Average return = 9% and Standard deviation = 20%
= [tex]\frac{20}{9}[/tex]
= 2.22
Hence COV of Poker-R-Us is 2.22
Ranking of stocks based on highest to lowest risk level is :
Idol Staff (2.33), Poker-R-Us (2.22), Rail Haul (2.08).
