Page 204 - P1 Integrated Workbook STUDENT 2018
P. 204
Chapter 11
Measuring risk
3.1 Standard deviation
The standard deviation compares all the actual outcomes with the expected value (or
mean outcome). It then calculates how far on average the outcomes deviate
from the mean.
The standard deviation is a measure of volatility: the more that
actual outcomes vary from the average outcome, the more
volatile the returns and therefore the more risk involved in the
investment/decision.
Standard deviation =
200
