Which of the following statements about the standard deviation are correct?
I. The standard deviation is a measure of relative dispersion.
II. Standard deviations should be in considered in conjunction with expected returns to compare investments.
III. The standard deviation is calculated by taking the square root of the variance.
IV. The higher the standard deviation of an investment, the lower its risk.
A) I and IV only
B) II and III only
C) I, III and IV only
D) I, II and III only

Question

Quizplus · Accepted Answer

The standard deviation is a measure of the dispersion or spread of a set of data points, making statement I correct. It is indeed used alongside expected returns to evaluate investments, as per statement II, because it provides a measure of risk. Statement III is accurate because the standard deviation is mathematically defined as the square root of the variance. Statement IV is incorrect; a higher standard deviation indicates higher risk, not lower.

Which of the Following Statements About the Standard Deviation Are