Question

94. Averaging the deviations from the mean for a portfolio of securities will: A. compute the standard deviation. B. compute the variance. C. equal zero. D. equal the number of securities in the portfolio.

Answer 1

Answer: C. equal zero

Step-by-step explanation:

The mean is average of the portfolio which means that some securities will be more than the mean and some will be less.

Some deviations will be positive, others will be negative.

When these deviations are added together, the negative deviations will cancel out the positive deviations which will lead to the average deviations being 0.