Question

The variance of an investment's returns is a measure of the:

A. probability of a negative return.
B. historic return over long time periods.
C. average value of the investment.
D. volatility of the rates of return.

Answer 1

B. historic return over long time periods.

Step-by-step explanation:

Variance is a metric applied in statistics to determine the squared deviation of a random variable from its mean value.

The variance of a return of investment is a measure of the historic return over large time periods. The historical return approach is more commonly used in the exercise of investing. It follows the data which is a finite set of historical returns of investment and assumes that each possible result has an equal probability.