Another measure needed when we are analyzing probabilistic situations is a measure ofthe risk due to the variability of the outcomes. Among the various measures of the varia-tion of a set of numbers that are used in statistical analysis are the range, the variance,and the standard deviation. The variance and the standard deviation are used most com-monly in the analysis of financial risk. We will use Var[X] or a)( to denote the varianceand ax to denote the standard deviation of random variable X, (If there is only one ran-dom variable in an analysis, we normally omit the subscript.)