Which of the following statements concerning the standard deviation are correct?
I. The greater the standard deviation,the lower the risk.
II. The standard deviation is a measure of volatility.
III. The higher the standard deviation,the less certain the rate of return in any one given year.
IV. The higher the standard deviation,the higher the expected return.
A) I and III only
B) II, III, and IV only
C) I, III, and IV only
D) I, II, and III only
E) I, II, III, and IV

Question

Quizplus · Accepted Answer

Statement I is incorrect because higher standard deviation indicates higher risk. Statement II is correct because standard deviation measures the variability or volatility of returns. Statement III is correct because higher standard deviation means greater uncertainty in returns. Statement IV is incorrect because there is no direct relationship between the standard deviation and expected return.

Which of the Following Statements Concerning the Standard Deviation Are