Which two of the following determine how sensitive a security is relative to movements in the overall market?
I. the standard deviation of the security
II. correlation between the security's return and the market return
III. the volatility of the security relative to the market
IV. the amount of unsystematic risk inherent in the security
A)I and III only
B)I and IV only
C)II and III only
D)II and IV only
E)III and IV only

Question

Quizplus · Accepted Answer

The two factors that determine how sensitive a security is relative to movements in the overall market are:
II. correlation between the security's return and the market return
III. the volatility of the security relative to the market.

The other factors listed do not specifically relate to sensitivity to market movements.

Which Two of the Following Determine How Sensitive a Security