Asked by Ambreen Chattha on May 02, 2024
Verified
_____ measures total risk.
A) The mean.
B) Beta.
C) The geometric average.
D) The standard deviation.
E) The arithmetic average.
Total Risk
The complete spectrum of risks associated with an investment, including both systematic and unsystematic risks.
Standard Deviation
A measure of the amount of variation or dispersion of a set of values, widely used in statistics to quantify the uncertainty or risk.
- Identify the distinctions among systematic risk, unsystematic risk, and total risk, and understand their importance in portfolio management.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
The standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of values. In finance, it is used to measure the total risk of an investment, as it reflects both the systematic and unsystematic risk components.
Learning Objectives
- Identify the distinctions among systematic risk, unsystematic risk, and total risk, and understand their importance in portfolio management.