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16 January, 15:37

Standard deviation and beta both measure risk, but they are different in that beta measures

a. both systematic and unsystematic risk.

b. only systematic risk, while standard deviation is a measure of total risk.

c. only unsystematic risk, while standard deviation is a measure of total risk.

d. both systematic and unsystematic risk, while standard deviation measures only systematic risk.

e. total risk, while standard deviation measures only nonsystematic risk.

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  1. 16 January, 17:44
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    b) only systematic risk, while standard deviation is a measure of total risk.

    Explanation:

    Standard deviation is measure of the total risks of an investment. It measures the volatility in return of an investment as a result of both systematic and non-systematic risks. Non-systematic risk includes risk that are unique to a company like poor management, legal suit against the company.

    Beta on the hand measures of only systematic risk. Systematic risk is the deviation of return of an investment form the average market return due to economic-wide factors like inflation, interest rate, exchange rate e. t. c

    b. only systematic risk, while standard deviation is a measure of total risk.
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Home » Business » Standard deviation and beta both measure risk, but they are different in that beta measures a. both systematic and unsystematic risk. b. only systematic risk, while standard deviation is a measure of total risk. c.
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