Total risk is measured by ________ and systematic risk is measured by ________.
A) beta; alpha
B) beta; standard deviation
C) alpha; beta
D) standard deviation; beta
E) standard deviation; variance

Question

Quizplus · Accepted Answer

Total risk is measured by standard deviation, which measures the variability of returns. Systematic risk is measured by beta, which measures the sensitivity of an asset's returns to changes in the overall market. Alpha measures the excess return of an asset over its expected return, and variance is the squared deviation from the mean, which is a component of standard deviation. Therefore, the best choice is D, which correctly matches the measures of risk to their types.

Total Risk Is Measured by ________ and Systematic Risk Is