Standard Deviation Financial Glossary

What is it? Standard deviation is a statistical measure of variance from the mean value, and is known as the root mean square deviation. The standard deviation measures the degree to which individual numbers tend to spread about their mean, or average, value. In statistical analysis, it is accepted that for a given sample of measurements, two-thirds of the sample normally fall within one standard deviation of the mean. For example, if there are 18 estimates, it can be assumed that 12 of them lie within plus or minus one standard deviation of the average.

Finance Term Definition Added By: Cooper

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