- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Statistical Measures of Asset Returns
- Subject 2. Measures of Dispersion

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**CFA Practice Question**

What is the difference between semi-deviation and shortfall risk?

Correct Answer: Both risks are downside risks. They are most often used to evaluate risky investments. Semi-deviation is an alternative measurement to

*standard deviation*or variance. Shortfall risk is the*probability*that the outcome will have a value less than the target return. It is the ratio of the number of observations below the target return to the total number of observations. When the target return is zero, the shortfall risk measure is commonly called the*risk of loss*.###
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