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