One of the implicit assumptions in using standard deviation as a measure of currency risk is that:
A)currency changes occur randomly in no discernable pattern.
B)only one currency can be considered at any one point in time.
C)the currency being considered has been actively traded in the currency markets for at least ten years.
D)currency changes are normally distributed,which means that currency changes occur in a regular pattern.

Question

Quizplus · Accepted Answer

The use of standard deviation as a measure of currency risk assumes that currency changes are normally distributed, meaning that changes occur in a regular pattern. This assumption allows for the calculation of probabilities and the interpretation of risk levels based on historical data.

One of the Implicit Assumptions in Using Standard Deviation as a Measure