A measure of the riskiness of an asset held in isolation is ________.
A) beta
B) standard deviation
C) covariance
D) alpha

Question

Quizplus · Accepted Answer

Standard deviation measures the volatility of an asset's returns and thus its riskiness when held in isolation. Beta measures the asset's risk in relation to the overall market and doesn't apply to individual assets. Covariance measures the degree to which two assets move together, but again, doesn't give a measure of an asset's riskiness in isolation. Alpha measures the excess return of an asset compared to its expected return based on its beta, so it also doesn't provide a measure of an asset's riskiness in isolation.

A Measure of the Riskiness of an Asset Held in Isolation