If one project has a higher standard deviation than another,
A) it may have a lower risk.
B) it may have a lower expected value.
C) it has fewer possible outcomes.
D) it may be riskier, but this can only be determined by the coefficient of variation.

Question

Quizplus · Accepted Answer

A higher standard deviation indicates greater variability in outcomes, which may make a project riskier. However, to determine if it is actually riskier, the coefficient of variation should be considered, which takes into account both the standard deviation and the expected value.

If One Project Has a Higher Standard Deviation Than Another