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Standard deviation is a statistical measure used to quantify the amount of variation or dispersion in a given set of data. In finance, standard deviation is used to measure the volatility of returns on an investment over time. By analyzing how often and by how much returns exceed (or lag) the average return, investors can assess the risk associated with an investment and make more informed decisions about their portfolio. Standard deviation also helps investors determine whether certain stocks are more risky than others; for instance, a stock that has higher standard deviation would indicate greater risk and potential reward compared to one with lower standard deviation.
In addition to its use in financial analysis, standard deviation can be utilized in other business settings such as quality control & manufacturing processes . For example , it can be used to identify sources of variance within production systems – i.e., any factors which may lead to unexpected deviations from expected performance metrics or desired outputs — so that corrective steps may be taken accordingly . Similarly , it is helpful in assessing test results & determining acceptable levels of accuracy ; if too many results are falling outside normal limits then additional review may be necessary before release into public consumption . Lastly , this metric is useful for tracking customer service metrics such as call wait times where high variability could signal underlying issues which need addressed