Which is the best measure of risk for an asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
A) Variance; correlation coefficient.
B) Standard deviation; correlation coefficient.
C) Beta; variance.
D) Coefficient of variation; beta.
E) Beta; beta.

Question

Quizplus · Accepted Answer

The coefficient of variation is the best measure of risk for an asset held in isolation as it considers both risk and return. Beta is the best measure for an asset in a diversified portfolio as it measures the asset's sensitivity to market movements.

Which Is the Best Measure of Risk for an Asset