In calculating the variance of a portfolio's returns, squaring the deviations from the mean results in:
I. Preventing the sum of the deviations from always equaling zero
II. Exaggerating the effects of large positive and negative deviations
III. A number for which the unit is percentage of returns

A) I only
B) I and II only
C) I and III only
D) I, II, and III

Variance

A statistical measurement of the dispersion of a set of values, indicating how much the numbers in the set deviate from the mean or average of the set.

Deviations

Statistical variances or differences from a central value, such as the mean, indicating how spread out data points are.

Mean

A statistical measure of central tendency, commonly understood as the average value of a set of numbers.