Standard Deviation and Beta Both Measure Risk, but They Are

question 51

Multiple Choice

Standard deviation and beta both measure risk, but they are different in that beta measures

• A) both systematic and unsystematic risk.
• B) only systematic risk, while standard deviation is a measure of total risk.
• C) only unsystematic risk, while standard deviation is a measure of total risk.
• D) both systematic and unsystematic risk, while standard deviation measures only systematic risk.
• E) total risk, while standard deviation measures only nonsystematic risk.

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Definitions:

Traffic Accidents

Incidents involving vehicles on public roads that result in damage, injury, or loss of life.

Poisson Distributed

A description of a distribution pattern that applies to events with a fixed interval of time or space, denoting the probability of a given number of events happening in a fixed interval.

Probability

A numerical assessment, between 0 and 1, representing the chance of an event taking place.

Poisson Random Variable

A type of random variable that expresses the probability of a given number of events happening in a fixed interval of time or space, assuming events occur with a known constant mean rate and independently of the time since the last event.