The higher the standard deviation of a stock's annual returns, the:
A) lower the level of unique risk.
B) lower the expected rate of return.
C) higher the accuracy of predictions of the stock's return for any given year.
D)wider the dispersion of those returns over time.

Question

Quizplus · Accepted Answer

Standard deviation measures the volatility of returns, so higher standard deviation means greater variability in returns over time. This translates to a wider dispersion of returns over time (i.e. greater risk).

The Higher the Standard Deviation of a Stock's Annual Returns