____ is the appropriate measure for stand-alone risk and ____ is the appropriate measure of risk when adding an asset to a diversified portfolio.
A) beta;variance
B) beta;standard deviation
C) standard deviation;beta
D) standard deviation;variance

Question

Quizplus · Accepted Answer

Standard deviation is a measure of total risk, including both diversifiable and non-diversifiable risk, and is appropriate for stand-alone risk. Beta, on the other hand, measures only systematic risk and is therefore appropriate for measuring the risk of an asset only within a diversified portfolio.

____ Is the Appropriate Measure for Stand-Alone Risk and ____

Is the Appropriate Measure for Stand-Alone Risk and