Standard Deviation & Variance in Finance


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What is the mathematical relationship between the variance and the standard deviation?

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1. If you want to invest in a new stock but get very stressed out when you see large fluctuations in the price, even if the price is generally increasing, which of the following stocks (all with an average of around $30) is best for you?

2. What is the general category of metrics that describe numeric data?

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About This Quiz & Worksheet

Trading in stocks often requires statistical calculations. The questions on this quiz and worksheet combination test your knowledge of the use of standard deviation and variance in financial applications.

Quiz & Worksheet Goals

You will answer questions that test you on:

  • How variance and standard deviation are related in math
  • What the variance of a stock with a given standard deviation is
  • Which item in a given list is a dependent variable

Skills Practiced

  • Defining key concepts - ensure that you can accurately define terms such as standard deviation and variance
  • Reading comprehension - ensure that you fully comprehend what you've read about which stock to choose based on price fluctuations
  • Information recall - access the knowledge you've gained regarding the metrics that describe numeric data

Additional Learning

Work through the lesson titled Standard Deviation & Variance in Finance if you'd like additional study. Upon completion, you should be able to do the following:

  • Define quantitative analysis
  • Explain how many data points are needed to calculate a stock's price
  • Name a tool that helps to make it easy to calculate and copy the data