Assume you are riskaverse and have the following three choic

Assume you are risk-averse and have the following three choices.    

                  Expected                                 Standard

                     Value                                    Deviation         

A         $          2,010 $          1,700

B                    2,420 1340

C                    2,180 1,490             

Compute the coefficient of variation for each. (Round your answers to 3 decimal places.)

Coefficient of Variation

A _______

B_______

C_______

Which project will you select? Project A   Project B   or Project C ?

Solution

coefficient of variation=Standard deviation/Expected value

Hence since individual is risk averse;choice having lowest  coefficient of variation must be selected ie Project B.