Question: Metal manufacturing Inc. has isolated four alternatives for meeting its needs for increased production capacity. The below table summarizes data gathered relative to each of these alternatives.
|
Expected |
Standard |
| Alternative |
return |
deviation of return |
| A |
20% |
7.0% |
| B |
22% |
9.5% |
| C |
19% |
6.0% |
| D |
16% |
5.5% |
a) Calculate the coefficient of variation for each alternative.
b) If the firm wishes to minimize risk, which alternative do you recommend? Why?