Asked by Jeremiah Starre on Apr 27, 2024
Verified
The larger the variance, the greater the risk of the investment.
Variance
Refers to the measure of dispersion between numbers in a data set, indicating how far each number in the set is from the mean.
Investment Risk
The potential for losing part or all of an investment due to market volatility, economic changes, or other factors.
- Become familiar with the application of standard deviation and variance in determining the level of risk and volatility in investment strategies.
Verified Answer
SP
sarani pavithraApr 30, 2024
Final Answer :
True
Explanation :
Variance measures the dispersion of a set of data points around their mean value. In finance, a higher variance of investment returns indicates greater volatility, implying a higher risk since the investment's returns are more unpredictable.
Learning Objectives
- Become familiar with the application of standard deviation and variance in determining the level of risk and volatility in investment strategies.