Question

Because the statistic called the standard deviation measures the volatility of a variable, it is used to measure the return of a portfolio.

a. true
b. false

Answer 1

It is not true or false because the statistic called the standard deviation measures the volatility of a variable, it is used to measure the return of a portfolio.

Standard deviation is a measure of the dispersion of a set of data from its mean. It is premeditated as the square root of variance by defining the variation among each data point relative to the mean.

In economics, standard deviation is a numerical measurement; when applied to the yearly rate of return of an asset, it sheds light on the historical volatility of that investment.

Answer 2

True. The standard deviation measures the volatility of a variable and the performance of a portfolio because it is a common dispersion measure that indicates the data with respect to the mean, indicating that the higher the standard deviation, the greater the dispersion of the data. The standard deviation is a measure of risk because of the greater the dispersion or variability of the returns of an asset, the greater the possibility that the expected and realized returns will be different from each other.