Standard Deviation - Measures of Dispersion, Business Mathematics & Statistics

# Standard Deviation - Measures of Dispersion, Business Mathematics & Statistics Video Lecture - Business Mathematics and Statistics - B Com

115 videos|142 docs

## FAQs on Standard Deviation - Measures of Dispersion, Business Mathematics & Statistics Video Lecture - Business Mathematics and Statistics - B Com

 1. What is standard deviation?
Ans. Standard deviation is a measure of dispersion that quantifies the amount of variation or spread in a set of data. It measures how much the values in a dataset deviate from the mean. A higher standard deviation indicates a greater spread of data points, while a lower standard deviation indicates a more clustered or concentrated distribution.
 2. How is standard deviation calculated?
Ans. To calculate the standard deviation, follow these steps: 1. Calculate the mean (average) of the dataset. 2. Subtract the mean from each data point and square the result. 3. Find the average of the squared differences. 4. Take the square root of the average calculated in step 3 to obtain the standard deviation.
 3. Why is standard deviation important in statistics?
Ans. Standard deviation is important in statistics because it provides a measure of the dispersion or variability in a dataset. It allows us to understand how much the data points differ from the mean. By analyzing the standard deviation, we can make comparisons, identify outliers, assess the reliability of statistical results, and make informed decisions based on the variability of the data.
 4. How does standard deviation relate to risk in finance?
Ans. In finance, standard deviation is used as a measure of risk. It helps investors determine the potential volatility or fluctuation in the returns of an investment. Higher standard deviation indicates higher risk, as it suggests larger price swings and uncertainty. Lower standard deviation implies lower risk, indicating a more stable investment with smaller price fluctuations. Investors often use standard deviation to assess the risk-reward tradeoff and make informed investment decisions.
 5. Can standard deviation be negative?
Ans. No, standard deviation cannot be negative. It is always a non-negative value or zero. Standard deviation is a measure of dispersion, which represents the spread of data points around the mean. Therefore, it cannot be negative as it measures the absolute deviation from the mean. A value of zero indicates that all data points are the same and have no variation.

115 videos|142 docs

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