- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Statistical Measures of Asset Returns
- Subject 2. Measures of Dispersion

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**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

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**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 |