Variance and Standard Deviation Quiz

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$ ext{Variance} = rac{1}{n} imes igg( rac{ ext{Sum of } (R_i - E(R_i))^2 imes P_i}{ ext{Total Sum of } (R_i - E(R_i))^2 imes P_i} igg)$
$ ext{Variance} = rac{1}{n} imes igg( rac{ ext{Sum of } (R_i - E(R_i))^2}{ ext{Total Sum of } P_i} igg)$
$ ext{Variance} = rac{1}{n} imes igg( rac{ ext{Sum of } (R_i - E(R_i))^2 imes P_i}{ ext{Total Sum of } P_i} igg)$ (correct)
$ ext{Variance} = rac{1}{n} imes igg( rac{ ext{Sum of } (R_i - E(R_i))^2}{ ext{Total Sum of } (R_i - E(R_i))^2 imes P_i} igg)$

$ ext{Standard Deviation} = igg( rac{ ext{Sum of } (R_i - E(R_i))^2}{ ext{Total Sum of } P_i} igg)^{0.5}$ (correct)
$ ext{Standard Deviation} = igg( rac{ ext{Sum of } (R_i - E(R_i))^2}{ ext{Total Sum of } (R_i - E(R_i))^2 imes P_i} igg)^{0.5}$
$ ext{Standard Deviation} = igg( rac{ ext{Sum of } (R_i - E(R_i))^2 imes P_i}{ ext{Total Sum of } P_i} igg)^{0.5}$
$ ext{Standard Deviation} = igg( rac{ ext{Sum of } (R_i - E(R_i))^2 imes P_i}{ ext{Total Sum of } (R_i - E(R_i))^2 imes P_i} igg)^{0.5}$

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<p>Probability of the possible rate of return (A)</p> Signup and view all the answers

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The formula for variance of returns for an individual investment is: σ² = Σ[P_i * (R_i - E(R_i))²]
This formula calculates the variance of returns by summing the product of each possible outcome's probability (P_i) and the squared difference between the outcome (R_i) and the expected return (E(R_i))

R_i represents the individual possible outcomes or returns of the investment
E(R_i) represents the expected return of the investment, which is the mean or average return
P_i represents the probability of each possible outcome or return occurring