The riskiness of an asset is measured by
A)the magnitude of its return.
B)the absolute value of any change in the asset's price.
C)the standard deviation of its return.
D)risk is impossible to measure.

Question

Quizplus · Accepted Answer

The riskiness of an asset is usually measured by the standard deviation of its return, which measures how much the returns on the asset tend to deviate from their average. Higher standard deviation indicates higher risk. The magnitude of the return (A) or absolute value of any change in price (B) do not necessarily indicate the riskiness of an asset. Option D, stating that risk is impossible to measure, is not correct as there are various methods and metrics available to measure risk.

The Riskiness of an Asset Is Measured by