ECONOMICS
RISK AND RETURN
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lower the expected rate of return
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higher the standard deviation
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lower the real rate of return
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lower the variance
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Detailed explanation-1: -The greater the standard deviation of securities, the greater the variance between each price and the mean, which shows a larger price range.
Detailed explanation-2: -Standard deviation measures the spread of a data distribution. The more spread out a data distribution is, the greater its standard deviation.
Detailed explanation-3: -Standard deviation helps determine market volatility or the spread of asset prices from their average price. When prices move wildly, standard deviation is high, meaning an investment will be risky. Low standard deviation means prices are calm, so investments come with low risk.
Detailed explanation-4: -The wider the dispersion of returns on a stock, the: higher the standard deviation.
Detailed explanation-5: -Standard deviation is a measure of how much an asset’s return varies from its average return over a set period of time. Standard deviation is a commonly used gauge of volatility in securities, funds, and markets. A high standard deviation indicates an asset with larger price swings and greater risk.