Asked by Teguh Daeli on Jul 02, 2024
Verified
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.
- Absorb and analyze the historical changes in volatility and gains across multiple asset classes.
Verified Answer
Learning Objectives
- Absorb and analyze the historical changes in volatility and gains across multiple asset classes.
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