Standard deviation is used when analysing portfolios because it:

Standard deviation is used when analysing portfolios because it:
A . Allows for a comparison of volatility
B . Identifies profitable trades
C . Makes it easier to track the performance against a benchmark
D . Identifies underperforming assets

View Answer

Answer: A

Explanation:

Standard deviation measures the volatility of returns, helping investors compare the risk levels of different portfolios or assets. A higher standard deviation indicates greater uncertainty in returns, which can signify higher risk.

[Reference: ICWIM, Topic: Risk Management and Portfolio Analysis., CFA Curriculum: Risk Metrics and Standard Deviation., , ]