The larger the standard deviation of returns of an investment, _____.
A) greater is the chance that the investment will outperform the market
B) lesser is the chance that the realized return will be negative
C) greater is the chance that the realized return will be negative
D) lesser is the chance that the realized return will differ significantly from the expected return
E) greater is the chance that the realized return will differ significantly from the expected return

Question

Quizplus · Accepted Answer

A larger standard deviation indicates higher volatility, meaning the realized return is more likely to differ significantly from the expected return.

The Larger the Standard Deviation of Returns of an Investment