If an investor does not diversify their portfolio and instead puts all of their money in one share, the appropriate measure of security risk for that investor is the ________.
A)share's standard deviation
B)variance of the market
C)share's beta
D)covariance with the market index

Question

Quizplus · Accepted Answer

The appropriate measure of security risk for an investor who does not diversify their portfolio and instead invests all of their money in one share is the share's standard deviation. The standard deviation measures the volatility of the share's returns and provides an indication of the potential range of outcomes. As such, it is an important measure of risk for an investor who has all their eggs in one basket.

If an Investor Does Not Diversify Their Portfolio and Instead