The relationship between risk and return for individual securities becomes evident only when we measure ________.
A) market return rather than total return
B) market risk rather than total risk
C) expected return rather than required return
D) risk level rather than return

Question

Quizplus · Accepted Answer

The relationship between risk and return for individual securities becomes evident when we measure market risk rather than total risk. Market risk, also known as systematic risk, is the risk inherent to the entire market or market segment, which affects the overall market and not just a particular stock or industry. This is in contrast to total risk, which includes both systematic and unsystematic (specific) risks. Understanding market risk is crucial for assessing the relationship between risk and return, as it reflects the volatility that affects all securities in the market.

The Relationship Between Risk and Return for Individual Securities Becomes