While ________ seems to be a reasonable measure of risk when evaluating a large portfolio,the ________ of an individual security does not explain the size of its average return.

Question

Quizplus · Accepted Answer

Volatility, as measured by standard deviation, is a reasonable measure of risk when evaluating a portfolio as a whole because it helps to capture the overall fluctuations in the portfolio's value. However, the volatility of an individual security does not necessarily explain the size of its average return, as other factors such as company performance or market trends can also play a role. The mean return, on the other hand, is a better measure of an individual security's performance. Therefore, the best choice is A.

While ________ Seems to Be a Reasonable Measure of Risk