The correct answer is: Both A and B.
Coefficient of variation is a measure of the relative variability of a set of data. It is calculated by dividing the standard deviation by the mean. A high coefficient of variation indicates that the data is spread out over a large range, while a low coefficient of variation indicates that the data is clustered closely around the mean.
Coefficient of variation can be used to compare the risk and return of different investments. For example, if two investments have the same mean return, but one has a higher coefficient of variation, then the first investment is considered to be less risky.
Coefficient of variation can also be used to compare the variability of different data sets. For example, if two data sets have the same mean, but one has a higher coefficient of variation, then the first data set is considered to be more variable.
Here is a brief explanation of each option:
- Option A: Risk. Risk is the possibility of loss or harm. In finance, risk is the possibility of losing money on an investment. Coefficient of variation can be used to measure the risk of an investment by comparing its standard deviation to its mean.
- Option B: Return. Return is the profit or loss from an investment. In finance, return is the total amount of money that an investor receives from an investment, including both capital gains and dividends. Coefficient of variation can be used to measure the return of an investment by comparing its standard deviation to its mean.
- Option C: Deviation. Deviation is the distance between a data point and the mean of the data set. Coefficient of variation is not a measure of deviation.
- Option D: Both A and B. Coefficient of variation is a measure of both risk and return.