Explanation : In order to find the bond with the lowest risk per unit of return, we need
to determine the bond with the lowest coefficient of variation.
¯¯ where s is the sample standard de¯
¯¯ is the
Bond A: CV = 4.9 = 0.299
Bond B: CV = 3.5 = 0.277
Bond C: CV = 4.2 = 0.284
Bond B, whose standard deviation and CV are the lowest, is least risky.