How is the coefficient of variation (COV) calculated?

The coefficient of variation (COV) is a statistical measure that demonstrates the relative variability of a dataset by expressing the standard deviation as a percentage of the mean. This is particularly useful in comparing the degree of variation between different datasets or populations, especially when their means differ significantly.

The calculation of COV involves dividing the standard deviation by the mean and then multiplying by 100. This formula provides a standardized measure of dispersion that allows for easier comparison of variability across data sets, even if the means are on different scales. In the context of real estate appraisal or financial analysis, understanding the COV can help assess the risk or volatility associated with different investments or properties relative to their average returns.

Other methods listed are not valid representations for calculating the coefficient of variation. The first option focuses on the average absolute deviation, which does not accurately reflect the standard deviation. The third option addresses the mean ratio, which is unrelated to the standard deviation or mean calculation needed for COV. The fourth option describes a relationship between net operating income and property value, which is a different financial metric and not relevant to COV.