Which Is the Best Measure of Risk for an Asset

question 5

Multiple Choice

Which is the best measure of risk for an asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?

• A) Standard deviation; correlation coefficient.
• B) Beta; variance.
• C) Coefficient of variation; beta.
• D) Beta; beta.
• E) Variance; correlation coefficient.

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Definitions:

Avoids Pain

The natural human tendency or behavior to avoid situations or actions that may lead to physical or emotional discomfort.

Ethical Hedonism

A philosophical belief that pleasure or happiness is the highest good and proper aim of human life.

Normative

Normative refers to standards or norms that are used to guide, control, or regulate behavior and beliefs within a society.

Pursuit

The act of following or chasing after something with the goal of catching or achieving it.