Because of Differences in the Expected Returns of Different Investments,the

question 105

True/False

Because of differences in the expected returns of different investments,the standard deviation is not always an adequate measure of risk.However,the coefficient of variation adjusts for differences in expected returns and thus allows investors to make better comparisons of investments' stand-alone risk.

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Definitions:

Price Variance

The difference between the actual cost of a good or service and its expected cost, often used in budgeting and financial analysis.

Labor Price Variance

The difference between the actual cost of labor and the standard cost expected for that labor, used in budgeting and cost management.

Quantity Variance

Quantity variance refers to the difference between the expected and actual quantity of materials or inputs used in the production process, impacting cost.

Standards

Predetermined benchmarks or norms used for measuring performance and setting expectations in various contexts, including production, quality, and accounting.