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Earn +20 ptsQ: Why is variance a poor measure of risk?
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How is variance used to measure risk?
In finance, risk of investments may be measured by calculating the variance and standard deviation of the distribution of returns on those investments. Variance measures how far in either direction the amount of the returns may deviate from the mean.
Why standard deviation is better measure of variance?
1. Standard deviation is not a measure of variance: it is the square root of the variance.2. The answer depends on better than WHAT!
Why do you measure dispersion?
How do we calculate variance
What is the measure of central tendency that is least affected by extreme values?
the variance
Which measure of variation is appropriate when using the mean?
The variance or standard deviation.
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