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Basic Question 0 of 4
A stock's return has a mean of 6% and a coefficient of a variation of 2. Its variance equals ______.
B. 144%%
C. 3%%
A. 12%%
B. 144%%
C. 3%%
User Contributed Comments 15
| User | Comment |
|---|---|
| eaglei | Gotta read that question! |
| nufan | wtf!... 144%% |
| mtcfa | So I think they mean 1.44%. |
| stevelaz | B is correct as the SD = 12. so the variance is 12^2 = 144 |
| bdaguy | Take each % sign to mean division by 100 ==> 144%% = 1.44% = 0.0144 Standard Deviation = 2 x 6% = 12% = 12/100. Variance = (12/100)^2 = (144/10000) = 0.0144 |
| MattyBo | How I got to the answer: Formula: CV = s/Xbar 2 = s/6% s = 2*6% s = 12% variance = s^2 12%^2 = 144% |
| Sabs | It has to be 144%% or 144%squared. Just in case in exam they have a trick question, one answer with % and one with %% |
| JKiro | thanks bdaguy! |
| DonAnd | bdaguy is absolutely correct! |
| rsanfo | If you square the number, you must square the unit of measurement. For example, rate of acceleration is 32 feet per second per second, so for this question, they would show it as 32 feet second second. This explains the two % signs. |
| Creep | The answer is correct. |
| assiduous | Good concept....badly written question. |
| Huricane74 | Can someone explain if the following logic is incorrect: 12% = .12 .12^2 = 0.0144 or 1.44% |
| mcbreatz | I was thinking the same thing but it looks like it was explained above by bdaguy but each % sign is divide by 100. So 144%% is 1.44% which is .0144. |
| zeanww | Yeah, it should be 1.44% |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret target downside deviation;
CFA® 2024 Level I Curriculum, Volume 1, Module 2.