Standard deviation is an important concept in portfolio theory because:
A)it is a measure of risk for a stock when it is held on a stand-alone basis.
B)it is a measure of risk for a stock when it is held in a diversified portfolio.
C)it is a measure of the variability of a stock's return.
D)Both a. and c. are correct
E)All of the above are correct

Question

Quizplus · Accepted Answer

Standard deviation is a measure of the variability of a stock's return and is also used as a measure of risk when held in a diversified portfolio. It is not a measure of risk on a stand-alone basis and therefore choice A is incorrect. All of the options in choice E are correct, but D is the best choice as it does not include the incorrect option A.

Standard Deviation Is an Important Concept in Portfolio Theory Because