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Basic Question 14 of 23
Which of the following statements concerning the standard deviation is not true?
B. It is the square root of the variance.
C. Given a normal distribution, there is a 68% probability that an asset's return will be within 1 standard deviation of its mean.
D. It cannot take on values less than 1.
A. It is a measure of dispersion.
B. It is the square root of the variance.
C. Given a normal distribution, there is a 68% probability that an asset's return will be within 1 standard deviation of its mean.
D. It cannot take on values less than 1.
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan | Standard deviation is always positive but can be < 1. |
| surob | ...but should be >=0 |
| azramirza | danlan..i think u got the opposite...what is not true...can not take on values less than ....implies it can...:)) |
| michlam14 | remember when there is no deviation from mean SD=0 for risk free portfolio |
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Edward Liu
Learning Outcome Statements
calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data
calculate and interpret portfolio standard deviation
describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated
CFA® 2024 Level I Curriculum, Volume 2, Module 1.