Which of the following statements is FALSE?
A)The standard deviation is the square root of the variance.
B)Because investors dislike only negative resolutions of uncertainty,alternative measures that focus solely on downside risk have been developed,such as the semi-variance and the expected tail loss.
C)While the variance and the standard deviation are the most common measures of risk,they do not differentiate between upside and downside risk.
D)While the variance and the standard deviation both measure the variability of the returns,the variance is easier to interpret because it is in the same units as the returns themselves.

Question

Quizplus · Accepted Answer

The statement that "the variance is easier to interpret because it is in the same units as the returns themselves" is false. The variance is actually measured in squared units, and is therefore harder to interpret than the standard deviation, which is in the same units as the returns.

Which of the Following Statements Is FALSE