Variance
The average of the squared deviations from the mean, calculated as s² = Σ(x - x̄)²/(n-1) for a sample or σ² = Σ(x - μ)²/n for a population.
Real World
Investment analysts at Hargreaves Lansdown compare the variance of returns for different FTSE 100 shares — a higher variance signals a riskier, more volatile stock like Rolls-Royce compared to a utility like National Grid.
Exam Focus
Remember variance is in squared units — if asked to interpret spread in context, convert back to standard deviation for meaningful comparison.
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