How Is the Calculation of a Variance Affected by an Observation

question 15

Multiple Choice

How is the calculation of a variance affected by an observation with a negative rate of return when other returns are positive?

• A)it reduces the variance.
• B)it increases the variance.
• C)variance is not affected by negatives or positives.
• D)the effect cannot be determined from this information.

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Definitions:

Political Control

The influence or authority exerted by a government or political group over its citizens, economic system, or societal structures.

Inflation Rates

The percentage increase in the price level of goods and services over a period, reducing purchasing power.

Excess Reserves

Bank reserves that exceed the required minimum amount that financial institutions must hold in reserve against deposit liabilities.

Required Reserves

The minimum amount of reserves that a bank must hold as dictated by central banking regulations, typically a percentage of deposits.