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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'_
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