CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

A portfolio earned the following rates of return over a period of twelve months.

What is the portfolio's co-efficient of variation?
A. 3.54
B. 0.33
C. 3.04
Explanation: Co-efficient of variation = Std. dev./Average return = 0.85/0.24 = 3.54

User Contributed Comments 15

User Comment
danlan Ignore risk free rate.
anricus How is the standard deviation calculated? I've used my calculator and Sx is .85 but this is a population so variance x is applicable which I got as .81??
danlan Sample standard deviation is 0.852445 and population standard deviation is 0.81615
MUSK Why are we using sample standard deviation here rather than using population standard deviation?
gaur Is there a quick way to calculate Std. dev. I got the answer by doing Sum of all(Observation - Average)sq divided by n-1 (11). I got the right answer but it took like 5 mins to do it...Iam not sure 5 mins is appropriate time to spend on a question even if you can get it right. Iam more inclined towards leaving this and moving on...and maybe revisiting the question if I have time left in the end
achu Using the BA 2-Plus ,you can enter the data mode and enter 12 x-values. The calculator will then compute the mean and sample variance.
teeday thanks for the heads up on using the BA 2!
Yannicklin sample: because it's only for a period of 12 months

we would have taken population if we had portfolio returns for all periods held
kellyyang can someone shows how to get the #.81 and .24.
thanks
NickPash Can anybody show me how you can do this in HP12C? I spent more than 5 mins for this doing it mannually. Tnx.
NickPash Enter all xs such as 1.25 enter sigma+ ...-1.05 enter sigma+, then press, gS = .8524 , gx-bar = .24 , .85/.24=3.54
bp019j thx NickPash
endurance Easy task really - on the BAII, type in all the returns in the data (2nd data). Change to "stat" (2nd stat) and find X-bar and stddev. Divide 0,85 with 0,24 and you'll get 3.5417
hmichta Thanks endurance. Will save me loads of time :)
farhan92 guys using the ba II remember you can store values using the STO button and recall them using the RCL button so when you get to the mean hit STO 1 and then for the SD hit STO 2. Then do RCL 2/RCL 1
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