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.

Question

Quizplus · Accepted Answer

For a single asset held in isolation, the coefficient of variation is the best measure of risk as it accounts for both risk and return. For an asset in a diversified portfolio, beta is the best measure as it indicates the asset's sensitivity to market movements.

Which Is the Best Measure of Risk for a Single