Variance Is a Measure of ________ and the Higher the Variance

question 105

Multiple Choice

Variance is a measure of ________ and the higher the variance, ________.

• A)expected profit; the greater the profit
• B)risk; the greater the risk
• C)standard deviation; greater the standard deviation
• D)risk; the lower the risk

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Definitions:

Payback

A capital budgeting method that calculates the time needed to recoup the cost of an investment, based on its expected cash flows.

Market Rate

The current price at which an asset or service can be bought or sold in the marketplace.

Present Value

The amount of money that, if invested today, would grow to a designated future amount. Discounted value of future cash flows.