The standard deviation around an expected value is a useful measure of
A) expected value of an asset.
B) economic value of an asset.
C) the difference between the best-case return of an asset and its worst-case return.
D) deviation of an asset's actual returns from its expected returns.

Question

Quizplus · Accepted Answer

The standard deviation measures the degree of variability or dispersion of a set of values. In finance, it is often used to measure the risk of an asset by calculating the deviation of its actual returns from its expected returns, reflecting the potential losses an investor may experience due to market fluctuations. Therefore, option D is the best choice as it correctly describes the standard deviation's relevance to measuring an asset's risk.

The Standard Deviation Around an Expected Value Is a Useful