The information in the table below describes choices for a new doctor. The outcomes represent different macroeconomic environments, which the individual cannot predict.Table 5.3

-Refer to Table 5.3. In order to weigh which of the job choices is riskiest, an individual should look at:
A) the deviation, which is the difference between the probabilities of the two outcomes.
B) the deviation, which is the difference between the dollar amounts of the two outcomes.
C) the average deviation, which is found by averaging the dollar amounts of the two outcomes.
D) the standard deviation, which is the square root of the average squared deviation.
E) the standard deviation, which is the squared average square root of the deviation.

Question

The information in the table below describes choices for a new doctor. The outcomes represent different macroeconomic environments, which the individual cannot predict.Table 5.3
 
-Refer to Table 5.3. In order to weigh which of the job choices is riskiest, an individual should look at:
A) the deviation, which is the difference between the probabilities of the two outcomes. 
B) the deviation, which is the difference between the dollar amounts of the two outcomes. 
C) the average deviation, which is found by averaging the dollar amounts of the two outcomes. 
D) the standard deviation, which is the square root of the average squared deviation. 
E) the standard deviation, which is the squared average square root of the deviation.

Quizplus · Accepted Answer

The standard deviation is a measure of the amount of variation or dispersion of a set of values. In the context of assessing job choices and their risks, the standard deviation of the outcomes (in terms of income, for example) provides a quantitative measure of risk by indicating how much the outcomes deviate from the average on average. This makes it a useful statistic for comparing the riskiness of different job choices.

The Information in the Table Below Describes Choices for a New