A Stock's Standard Deviation Indicates How the Stock Affects the Riskiness

question 45

True/False

A stock's standard deviation indicates how the stock affects the riskiness of a diversified portfolio. Therefore, the standard deviation is a better measure of a stock's relevant risk than its beta coefficient, which measures total, or stand-alone, risk. 

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Definitions:

Domestic Producers

Companies that manufacture or produce goods and services within their home country, often contrasted with those producing or outsourcing overseas.

Imported Products

Products brought into one country from another for the purpose of sale, often subject to tariffs, quotas, or trade agreements.

Cultural Dimensions

Refers to the framework for cross-cultural communication, identifying and measuring the effects of a society's culture on the values of its members, and how these values relate to behavior.

Hofstede

A framework for cross-cultural communication, developed by Geert Hofstede, that analyzes cultures in terms of five (later six) dimensions such as power distance, individualism vs. collectivism, and uncertainty avoidance.