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In Calculating the Variance of a Portfolio's Returns, Squaring the Deviations

Question 64

Multiple Choice

In calculating the variance of a portfolio's returns, squaring the deviations from the mean results in:
I. Preventing the sum of the deviations from always equaling zero
II. Exaggerating the effects of large positive and negative deviations
III. A number for which the unit is percentage of returns


A) I only
B) I and II only
C) I and III only
D) I, II, and III

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