The coefficient of variation (CV) is useful for:

A Measuring absolute risk

B Comparing relative risk per unit of return across investments

C Calculating taxes

D Determining bond yields

✓ Correct Answer: Option B

CV = Standard Deviation / Mean. It measures risk per unit of return, allowing comparison of investments with different means.

💡 Why is B) the correct answer?

The correct answer to the question "The coefficient of variation (CV) is useful for:" is Option B: Comparing relative risk per unit of return across investments.

The other options — A) Measuring absolute risk, C) Calculating taxes, D) Determining bond yields — are incorrect for this CFA Exam Prep question. As explained above: CV = Standard Deviation / Mean. It measures risk per unit of return, allowing comparison of investments with different means.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Quantitative Methods topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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The coefficient of variation (CV) is useful for:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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