Which one of the following measures is relevant to the systematic risk principle?
A) variance
B) alpha
C) standard deviation
D) theta
E) beta

Question

Quizplus · Accepted Answer

The systematic risk principle states that the only relevant risk for an investor is the risk that cannot be diversified away, which is systematic risk. Beta measures the systematic risk of a security or portfolio relative to the market, so it is the most relevant measure for this principle. Variance, alpha, standard deviation, and theta all measure different types of risk, but they do not specifically measure systematic risk.

Which One of the Following Measures Is Relevant to the Systematic