Measures of risk for an investment include
A) Variance of returns and business risk
B) Coefficient of variation of returns and financial risk
C) Business risk and financial risk
D) Variance of returns and coefficient of variation of returns
E) All of the above

Question

Quizplus · Accepted Answer

The measures of risk for an investment typically include both variance of returns and coefficient of variation of returns. Variance measures the dispersion of returns around the expected return, while coefficient of variation measures the relative dispersion of returns in relation to the expected return. These measures are important because they provide investors with a way to quantify and compare the risk of different investments. While business risk and financial risk are also important considerations, they are more specific to the company or industry in question, and do not provide a comprehensive measure of investment risk.

Measures of Risk for an Investment Include