Correct concerning the variance of this security

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Reference no: EM131894470

You have computed the expected return on a security based on multiple economic states that have unequal probabilities of occurrence. Which one of the following statements is correct concerning the variance of this security?

a. The variance ignores the probabilities of occurrence.

b. The variance will be negative only when the overall expected rate of return on the security is negative.

c. The variance depends on both the rates of return and the probability of occurrence for each economic state.

d. The variance will remain constant if the probabilities of occurrence are changed.

e. The variance will most likely be negative if there is a high probability of an economic state occurring that will produce a highly negative return.

Reference no: EM131894470

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