Exam ICWIM Topic 1 Question 54 Discussion

Actual exam question for CISI's ICWIM exam
Question #: 54
Topic #: 1
How does standard deviation provide investors with a measure of historical volatility?

Suggested Answer: C Vote an answer

Standard deviation measures the dispersion of returns around the average (mean) return. A higher standard deviation indicates greater historical volatility, showing how much the returns deviate from the expected average.
Formula:
Standard Deviation=#(Ri#R#)2n\text{Standard Deviation} = \sqrt{\frac{\Sigma (R_i - \bar{R})^2}{n}} Standard Deviation=n#(Ri#R#)2 Where:
* RiR_iRi = Individual returns
* R#\bar{R}R# = Mean return
* nnn = Number of data points

by Sean at Aug 25, 2025, 02:59 AM

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