Table 8.3
Consider the following two securities X and Y.
-Which security (X or Y) in Table 8.3 has the least total risk? Which has the least systematic risk?
A) X; X
B) X; Y
C) Y; X
D) Y; Y

Question

Table 8.3
Consider the following two securities X and Y. 
-Which security (X or Y) in Table 8.3 has the least total risk? Which has the least systematic risk?
A) X; X 
B) X; Y 
C) Y; X 
D) Y; Y

Quizplus · Accepted Answer

Security X has the least total risk because it likely has a lower standard deviation of returns compared to security Y. Security Y has the least systematic risk because it probably has a lower beta, indicating less sensitivity to market movements.

Table 8.3 Consider the Following Two Securities X and Y