Volatility
Principles of Finance glossary · Risk, Return & Portfolio Theory
Definition
The standard deviation of returns, typically annualized.
Volatility in plain English
Volatility is a single number for how much an investment's returns bounce around, calm and steady versus wild and jumpy. Technically it's the standard deviation of returns (the typical distance from the average result), and it's usually stated as a yearly figure so different assets can be compared fairly. A calm government bond has low volatility, while a trendy tech stock or crypto has high volatility, meaning big ups and downs. Higher volatility signals more uncertainty, which is generally treated as more risk, the price you might pay for a shot at bigger gains.
Learn these first
Practice Volatility
Related Principles of Finance terms
Principles of Finance practice questions · Principles of Finance flashcards · Principles of Finance study guide