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IMANET CMA Exam - Topic 7 Question 129 Discussion

The expected rate of return for the stock of Cornhusker Enterprises is 20%, with a standard deviation of 1 5%.The expected rate of return for the stock of Mustang Associates is 10%, with a standard deviation of 9%.The riskier stock is
D) Mustang because the coefficient of variation is higher.
A) Cornhusker because the return is higher.
B) Cornhusker because the standard deviation is higher.
C) Mustang because the standard deviation is higher.

IMANET CMA Exam - Topic 7 Question 129 Discussion

Actual exam question for IMANET's CMA exam
Question #: 129
Topic #: 7
[All CMA Questions]

The expected rate of return for the stock of Cornhusker Enterprises is 20%, with a standard deviation of 1 5%.The expected rate of return for the stock of Mustang Associates is 10%, with a standard deviation of 9%.The riskier stock is

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Suggested Answer: D

The coefficient of variation is useful when the rates of return and standard deviations of two investments differ. It measures the risk per unit of return because it divides the standard deviation by the expected return. The coefficient of variation is much higher for Mustang_(0.910 = .9) than for Cornhusker (.15.20 = .75).


by Lillian at Jul 02, 2026, 11:11 PM

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Christiane
2 days ago
Mustang's standard deviation is lower, but the return is too.
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Gretchen
7 days ago
20% return sounds great, but that standard deviation is wild!
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Golda
12 days ago
Wait, isn't it about the coefficient of variation?
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Tamar
17 days ago
Totally agree, B is the right choice!
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Arthur
22 days ago
Cornhusker has a higher standard deviation, so it's riskier.
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Delfina
28 days ago
I feel like I’ve seen a similar question before, and it was all about standard deviation. So, I’m leaning towards B for Cornhusker being riskier.
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Huey
1 month ago
I’m a bit confused about the coefficient of variation. Isn’t that supposed to help compare the risk relative to the return? Maybe Mustang is riskier after all?
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Peter
1 month ago
I remember practicing a question like this where we had to compare risk using standard deviation. I think that makes Cornhusker the riskier stock.
upvoted 0 times
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Lajuana
1 month ago
I think Cornhusker is riskier because it has a higher standard deviation, but I’m not completely sure if that’s the only factor to consider.
upvoted 0 times
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