A statistical measure of the spread between the mean and the return of a financial asset is measured by the:Select one:a. Covarianceb. Variancec. Correlation coefficientd. Coefficient of variation
Question
A statistical measure of the spread between the mean and the return of a financial asset is measured by the:Select one:a. Covarianceb. Variancec. Correlation coefficientd. Coefficient of variation
Solution
The correct answer is b. Variance. Variance is a statistical measure that tells us how much a set of observations differ from the average. In the context of a financial asset, it measures how much the returns on the asset vary from the mean return.
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