The variance of a stock's returns can be calculated as the:
A) average value of deviations from the mean.
B) average value of squared deviations from the mean.
C) square root of average value of deviations from the mean.
D) sum of the deviations from the mean.

Question

Quizplus · Accepted Answer

Variance is calculated by finding the average of the squared deviations from the mean. This gives a measure of how spread out the returns are from their average value. Therefore, the correct choice is B, which is the average value of squared deviations from the mean.

The Variance of a Stock's Returns Can Be Calculated as The