As the probabilities associated with the expected returns of an asset change, the standard deviation of the asset will:
A) increase.
B) decrease.
C) remain the same.
D) increase or decrease.
E) decrease if the expected return decreases.

Question

Quizplus · Accepted Answer

The standard deviation of an asset, which measures the asset's risk or volatility, can either increase or decrease as the probabilities associated with its expected returns change. This is because the standard deviation is affected by the variability of those returns, not just their expected value.

As the Probabilities Associated with the Expected Returns of an Asset