Which of the following statements is/are true about the variance of the possible future returns on a financial asset?
A) The standard deviation of the possible returns on an asset is equal to the square root of the variance of the possible returns.
B) Low-variance securities are high-standard deviation securities.
C) The variance and the standard deviation of the possible returns on a risk-free asset are negative.
D) Standard deviation of returns can be computed without considering probabilities, but variance cannot.
E) All else equal, assets with high average returns will also have high standard deviations relative to those with lower returns.

Question

Quizplus · Accepted Answer

A) The standard deviation of the possible returns on an asset is equal to the square root of the variance of the possible returns. This is a fundamental principle in statistics, where the standard deviation is indeed the square root of the variance, providing a measure of the dispersion of a set of values.

Which of the Following Statements Is/are True About the Variance