The most relevant risk that must be considered for any widely traded individual security is its ____.
A) unsystematic risk
B) standard deviation
C) covariance risk
D) systematic risk

Question

Quizplus · Accepted Answer

Systematic risk, also known as market risk, is the risk inherent in the entire market or a particular market segment. It cannot be diversified away and affects all securities in the market or segment. It is, therefore, the most relevant risk that must be considered for any widely traded individual security. Unsystematic risk, on the other hand, is the risk that is specific to a particular company or industry and can be diversified away. Standard deviation and covariance risk are measures of volatility, which are important in assessing risk, but they do not specifically relate to the overall market risk of a security.

The Most Relevant Risk That Must Be Considered for Any