alleryStart learning →The most commonly used measure of volatility of returns in finance is the:
ALargest single loss
BStandard deviation
CSimple average
DMedian return
Answer & Solution
Correct answer: B. Standard deviation
1. Volatility needs a single summary number.
2. Returns vary from year to year.
3. The most commonly used measure of volatility of returns is the standard deviation.
4. It is computed from the returns themselves.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 15 'Risk, Return, and Capital Market Theory'_
Keep practising Risk and Return
Browse all Risk and Return questions for US CMA Part 2, or explore more Finance topics.
Related questions
Complete the risk rulesMatch each risk termStack the risk termsSort the CAPM symbolsPull the rope to the right riskAn investor holding one stock rather than many is most exposed to which avoidable risk?Under CAPM, an asset with higher systematic risk should offer an expected return that is:Beta is relevant to investors because it measures the risk that is: