Returns expected by investors logically should be related to ________ as opposed to total risk

Question

Quizplus · Accepted Answer

Returns expected by investors are logically related to systematic risk, also known as market risk, which is the risk associated with the overall market or economy, rather than to unsystematic or diversifiable risk, which can be eliminated through diversification. The standard deviation is a measure of total risk, which includes both systematic and unsystematic risk, and may not necessarily be the most relevant measure for investors when assessing expected returns.

Returns Expected by Investors Logically Should Be Related to ________