If one project has a higher standard deviation than another,

Question

Quizplus · Accepted Answer

The standard deviation measures the amount of variability or dispersion in the outcomes of a project. A higher standard deviation indicates that the outcomes are more spread out and unpredictable, which may suggest a higher level of risk. However, the degree of riskiness can only be assessed by considering the coefficient of variation, which takes into account the standard deviation relative to the expected value. Therefore, answer choice D is correct because it acknowledges that a higher standard deviation may indicate greater risk, but this cannot be determined without considering the coefficient of variation. Answer choices A, B, and C are incorrect because they make generalized assumptions that do not necessarily hold true in all cases.

If One Project Has a Higher Standard Deviation Than Another