Explain why the variance of an investment is a useful measure of the risk associated with it
What will be an ideal response?
The variance provides a measure of the spread of the probability distribution around the expected value of the investment. That is, if the variance is relatively small, the expected value is more likely to be the actual value. If the variance is relatively large, the expected value is less likely to be the actual value. Since something that is more uncertain is said to be more risky, and something with a higher variance is more uncertain, the variance measures risk.
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If currency outside of banks is $800 billion; traveler's checks are $10 billion; checkable deposits owned by individuals and businesses are $700 billion; savings deposits are $4,000 billion; small time deposits are $1,000 billion; and money market
funds and other deposits are $800 billion, then M2 equals ________ billion. A) $7,310 B) $5,800 C) $710 D) $2,510 E) $1,510
In a labor market, employment
A) and the wage rate are higher when the market is a monopsony than when the market is competitive. B) is higher and the wage rate is lower when the market is a monopsony than when the market is competitive. C) is lower and the wage rate is higher when the market is a monopsony than when the market is competitive. D) and the wage rate are lower when the market is a monopsony than when the market is competitive.
The Cournot and Stackelberg models are similar, EXCEPT Cournot ________ and Stackelberg ________
A) sets price; sets output B) sets output; sets price C) is dynamic; is static D) is static; is dynamic
Exports have the same effect on the current size of GDP as:
A. imports. B. investment. C. taxes. D. saving.