Given a set of returns,the wider the distribution of those returns,the
A)higher the number of those returns.
B)lower the average rate of return.
C)lower the variance.
D)higher the standard deviation.
E)lower the volatility.

Question

Quizplus · Accepted Answer

The standard deviation measures the spread or variability of the returns around the average return. Therefore, the wider the distribution of returns (i.e., the greater the range between the highest and lowest returns), the higher the standard deviation of those returns. Choices A, B and E are incorrect because they do not accurately characterize the relationship between the distribution of returns and other statistical measures such as the number of returns, the average return, or volatility. Choice C is also incorrect because the variance is directly proportional to the standard deviation, meaning that a wider distribution of returns would result in a higher variance, not a lower variance.

Given a Set of Returns,the Wider the Distribution of Those