Which of the following is correct?
A)Total risk is measured by the standard deviation.
B)There is a positive relationship between risk and return.
C)If you observe a high variability in a stock's returns you can infer that the stock is very risky.
D)All of these statements are correct.

Question

Quizplus · Accepted Answer

All of these statements are correct.

- A) Total risk is measured by the standard deviation: This is correct as standard deviation measures the dispersion of returns around the stock's average return, which gives an idea of the total risk of the stock.
- B) There is a positive relationship between risk and return: This is correct as higher risks are associated with higher returns, as per the risk-reward tradeoff principle.
- C) If you observe a high variability in a stock's returns you can infer that the stock is very risky: This is also correct as high variability or dispersion in returns is an indicator of higher risk.

Which of the Following Is Correct