If the _____________ of a stock is known, an investor can use the security market line to determine the expected return on that stock.
A) standard deviation
B) beta
C) coefficient of variation
D) unsystematic risk

Question

Quizplus · Accepted Answer

The beta of a stock measures its volatility in relation to the overall market. The security market line is a graph that shows the expected return on an asset based on its beta, so knowing the beta of a stock allows an investor to use this line to determine the expected return. The other options (standard deviation, coefficient of variation, and unsystematic risk) are measures of risk, but they do not directly relate to the calculation of expected return using the security market line.

If the _____________ of a Stock Is Known, an Investor