A problem with the variance as a measure of risk is that by squaring the individual deviations from the mean, you end up with a measure that is in squared units.To get back to the original units of measurement we commonly take the square root and obtain a risk measure known as:
A)the confidence interval.
B)standard deviation.
C)co-efficient of variation.
D)kurtosis.
E)the root mean square.

Question

Quizplus · Accepted Answer

Standard deviation is obtained by taking the square root of the variance, which helps in converting the risk measure back to the original units of measurement.

A Problem with the Variance as a Measure of Risk