Question

standard deviation is a good measure for somebody who is primarily worried about capital loss

true or false.

Answer 1

In investing, standard deviation is used as an indicator of market volatility and, therefore, of risk. The more unpredictable the price action and the wider the range, the greater the risk. Range-bound securities, or those that do not stray far from their means, are not considered a great risk. That's because it can be assumed—with relative certainty—that they continue to behave in the same way. A security with a very large trading range and a tendency to spike, reverse suddenly, or gap is much riskier, which can mean a larger loss. But remember, risk is not necessarily a bad thing in the investment world. The riskier the security, the greater potential it has for payout.

The higher the standard deviation, the riskier the investment.

thus the statement is true