As a Measure of Variability, What Is Defined as the Maximum

question 26

Multiple Choice

As a measure of variability, what is defined as the maximum value minus the minimum value?

• A) variance
• B) standard deviation
• C) mean
• D) range
• E) median

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Definitions:

Capital Allocation Line

A graph showing risk-versus-return profiles of different portfolios, including the risk-free rate and a combination of risky assets, guiding optimal asset allocation.

Efficient Frontier

A concept in modern portfolio theory demonstrating the set of optimal portfolios offering the highest expected return for a given level of risk.

Portfolio Standard Deviation

A measure of the dispersion of the returns of a portfolio, indicating its risk.

Individual Security

A specific financial instrument, such as a stock or bond, representing an investment in assets or rights to ownership.