For a Random Variable X, the Mean Value of the Squared

question 2

Multiple Choice

For a random variable X, the mean value of the squared deviations of its values from their expected value is called its ________.

• A) standard deviation
• B) mean
• C) probability
• D) variance

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Definitions:

Security Market Line

A graphical representation used in the Capital Asset Pricing Model (CAPM) that shows the relationship between the expected return of an investment and its risk.

Black, Jensen, and Scholes

Refers to the authors of a landmark study in finance, particularly known for their work related to the capital asset pricing model (CAPM) and option pricing theory.

CAPM

The Capital Asset Pricing Model is a financial model that describes the relationship between systemic risk and expected return for assets, particularly stocks.

Security Market Line

A graphical representation of the Capital Asset Pricing Model, showing the relationship between the expected return of an investment and its risk.