For two investment opportunities A and B, the expected monetary values are 900 and 600 and the corresponding standard deviations are 100 and 50, respectively. If CD denotes the coefficient of dispersion, then:  

The correct answer is CD(A) > CD(B)
Key Points

• The coefficient of dispersion (CD) is a measure of relative variability, and it is calculated as the ratio of the standard deviation to the mean.
• Upon assessing two investment prospects, denoted as 'A' and 'B', the respective expected monetary values are quantified as 900 and 600 units. The corresponding standard deviations, representing the variability of these investments, are noted as 100 and 50 units for 'A' and 'B' respectively.
• Employing the coefficient of dispersion (CD), which elucidates the relative variability by expressing the ratio of the standard deviation to the mean, the computations are as follows:
  • The coefficient of dispersion for investment 'A', CD(A), equates to the standard deviation of 'A' divided by its expected monetary value, yielding  (rounded to four decimal places).
  • The coefficient of dispersion for investment 'B', CD(B), equates to the standard deviation of 'B' divided by its expected monetary value, yielding  (rounded to four decimal places).
• Therefore, it is proved that CD(A) > CD(B). ⇒Investment 'A' manifests a higher degree of variability or risk, as compared to investment 'B', when evaluating the ratio of standard deviation to expected monetary value. 

Hence, given the information, if CD denotes the coefficient of dispersion, then CD(A) > CD(B).