What does standard deviation signify in Market Indices TAB?

What does standard deviation signify in Market Indices TAB?

• A. Liquidity
• B. Risk
• C. Tax impact
• D. Return

Answer: (B)

Standard deviation tells you how spread out the index’s returns have been around their average, which reflects volatility. A higher value means bigger swings in price from period to period, signaling higher risk for an investor. In the Market Indices TAB, this statistic is used to indicate how risky or volatile the index has been historically. It doesn’t measure how easy it is to buy or sell (liquidity), nor tax consequences, nor the average return itself. Return is described by the mean, while standard deviation focuses on the variability around that mean, i.e., the risk.

Standard deviation tells you how spread out the index’s returns have been around their average, which reflects volatility. A higher value means bigger swings in price from period to period, signaling higher risk for an investor. In the Market Indices TAB, this statistic is used to indicate how risky or volatile the index has been historically. It doesn’t measure how easy it is to buy or sell (liquidity), nor tax consequences, nor the average return itself. Return is described by the mean, while standard deviation focuses on the variability around that mean, i.e., the risk.