Asked by Desirea Moore on May 01, 2024
Verified
The systematic risk of the market is represented by:
A) A beta of 1.0.
B) A beta of 0.0.
C) A standard deviation of 1.0.
D) A standard deviation of 0.0.
E) A variance of 1.0.
Systematic Risk
The risk inherent to the entire market or market segment, which cannot be mitigated through portfolio diversification.
Beta
A measure of a stock's volatility in relation to the overall market, indicating its relative risk.
Market
A place or platform where buyers and sellers come together to trade goods, services, or financial instruments.
- Acquire knowledge of the security market line (SML) and beta, recognizing their role in the management of portfolios.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
A
Explanation :
A beta of 1.0 represents the systematic risk of the market, indicating that the asset moves exactly in line with the market.
Learning Objectives
- Acquire knowledge of the security market line (SML) and beta, recognizing their role in the management of portfolios.