Question

The variance of a probability distribution is used to measure risk because a higher variance is associated with:_______

a. a wider spread of values around the mean.
b. a more compact distribution.
c. a lower expected value.
d. both a and b
e. all of the above

Answer 1

Answer:

The appropriate solution is Option a (a wider spread of values around the mean).

Explanation:

• Probability distributions could be characterized for random or unknown variables that are continuous and even some discrete.
• Intuition became linked to the number of random variables samples' attributes. The probability distribution would have any probability P(x) among zero (0) and one (1) for ordinal variables as well as the total of all of the other probabilities become one.

The many other suggestions made didn’t apply to the current case. Therefore the answer above would be correct.