One common reason for reporting standard deviations rather than variances is that standard deviations:
A) are lower.
B) are stated in understandable units.
C) account properly for negative returns.
D)take probability estimates into consideration.

Question

Quizplus · Accepted Answer

Standard deviations are stated in the same units as the original data, making them more understandable than variances. Option A is incorrect because standard deviations are typically higher than variances. Option C is incorrect because both variances and standard deviations can handle negative numbers. Option D is incorrect because both variances and standard deviations take probability estimates into consideration.

One Common Reason for Reporting Standard Deviations Rather Than Variances