Which of the following best describes the relationship between a stock's beta and the standard deviation of the stock's returns?
A) The higher the standard deviation, the higher the beta.
B) The higher the standard deviation, the lower the beta.
C) There is no particular relationship between a stock's standard deviation of returns and it's beta.
D) Standard deviation and beta are different ways of measuring the same thing.

Question

Quizplus · Accepted Answer

Beta measures a stock's volatility relative to the market, while standard deviation measures the stock's total volatility. They are related but not directly proportional, as beta does not account for unsystematic risk.

Which of the Following Best Describes the Relationship Between a Stock's