Which Is the Best Measure of Risk for a Single

question 42

Multiple Choice

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

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

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Definitions:

Income and Expenses

Refers to the money received (income) and the costs incurred (expenses) by an individual or business, which determine the net profit or loss.

Free Cash Flow (FCF)

The amount of cash that a company generates after accounting for capital expenditures needed to maintain or expand its asset base.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating its ability to fund operations, debt, and investments.

Gross Fixed Assets

The total value of a company's physical assets that are used in its operations and not expected to be consumed or converted into cash in the short term.