Practice Quiz

Financial Planner

Category - Investment Planning

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Volatility is the amount by which the price of a security swings up and down. If the price of a security moves up and down frequently, it has_____ volatility.
Fill in the blank with the most suitable word.
  1. high.
  2. low.
  3. medium.
  4. no.
Explanation
Answer: A - If the price of a security moves up and down rapidly over a short time, it has high volatility. However, if the price almost never changes, the security has low volatility.
Volatility is a measure of risk. The more volatile the price of a security is, the riskier the security is. Understanding the volatility of a security can help maximize returns and minimize losses from investments.
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