The Returns on Your Portfolio Over the Last 5 Years

question 60

Multiple Choice

The returns on your portfolio over the last 5 years were -5%,20%,0%,10% and 5%. What is the standard deviation of your return?

• A) 2.74%
• B) 5.21%
• C) 9.62%
• D) 10.12%
• E) 12.70%

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Definitions:

Second-order Model

A statistical model that includes the squared terms of the predictors to account for curvature in the relationship between the independent and dependent variables.

Significance Level

A statistical measure that quantifies the probability of rejecting the null hypothesis when it is in fact true, a critical component in hypothesis testing.

Retained

Often used in financial contexts to describe profits kept in a company rather than distributed to shareholders; can also refer to information or items kept or preserved.

Interaction Term

A variable in a statistical model that captures the effect of two or more variables acting together on a dependent variable.