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

Question

Quizplus · Accepted Answer

The coefficient of variation is the best measure of risk for a single asset held in isolation because it considers both the risk (standard deviation) and the expected return, providing a standardized measure of risk per unit of return. Beta is the best measure for an asset held in a diversified portfolio because it measures the asset's sensitivity to market movements, reflecting how changes in the market will likely impact the asset's returns in the context of a portfolio.

Which Is the Best Measure of Risk for a Single