Selecting Capital Projects with the Coefficient of Variation

The quantification of risk in capital budgeting is on the increase, yet theoretical models present problems in implementation. This paper develops the coefficient of variation as a tested, relatively simple tool which remains compatible with capital market theory.

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Bibliographic Details
Published inFinancial management Vol. 6; no. 2; pp. 65 - 70
Main Authors Osteryoung, Jerome S., Scott, Elton, Roberts, Gordon S.
Format Journal Article
LanguageEnglish
Published Albany, N.Y Financial Management Association 01.07.1977
Financial Management Association International
Blackwell Publishing Ltd
Subjects
Capital
Capital asset pricing models
Capital assets
Capital budgeting
Capital expenditures
Capital markets
Coefficients
Correlation coefficients
Investment risk
Projects
Risk premiums
Selection
Some Old and New Ideas on Capital Budgeting
Standard deviation
Systematic risk
Variation
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Summary:The quantification of risk in capital budgeting is on the increase, yet theoretical models present problems in implementation. This paper develops the coefficient of variation as a tested, relatively simple tool which remains compatible with capital market theory.
ISSN:0046-3892
1755-053X
DOI:10.2307/3665400