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.

Question

Quizplus · Accepted Answer

Beta measures only systematic risk, which is the risk that can't be diversified away and is related to market movements. Standard deviation, on the other hand, is a measure of total risk, which includes both systematic and unsystematic risk (the risk specific to a particular security or investment).

Standard Deviation and Beta Both Measure Risk, but They Are