Which of the Following Statements Is True

question 125

Multiple Choice

Which of the following statements is true?

• A)The standard deviation is always greater than the variance.
• B)The sum of the squared deviations from the mean is always zero.
• C)The standard deviation is in squared units.
• D)The sum of the deviations from each value in a data set to the mean, is always zero.

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Definitions:

Default Risk Premiums

The extra yield that an investor demands to compensate for the risk that the issuer of a bond may default on payment.

Treasury Bond

U.S. government debt instruments featuring fixed interest rates and long-term maturity periods exceeding ten years.

Subprime Mortgages

Loans granted to borrowers with poor credit histories, which carry higher interest rates than standard mortgages to compensate for the higher risk.

Mortgage-backed CDOs

Complex structured finance products that pool together cash flow-generating assets and repackages this asset pool into tranches that can be sold to investors, specifically focusing on mortgage-backed securities.