The Variance of a Stock's Returns Can Be Calculated as The

question 74

Multiple Choice

The variance of a stock's returns can be calculated as the:

• A) average value of deviations from the mean.
• B) average value of squared deviations from the mean.
• C) square root of average value of deviations from the mean.
• D) sum of the deviations from the mean.

---

Definitions:

IRR Method

The Internal Rate of Return method, a capital budgeting technique used to evaluate and compare the profitability of investments or projects.

Hurdle Rate

The minimum rate of return on an investment required by a manager or investor.

Capital-Budgeting

The process that a company undergoes to evaluate potential major projects or investments, such as new machinery or expansion plans.

Risk-Free Rate

The expected yield from an investment that carries no risk of losing money, often shown through the interest rates of government securities.