Standard deviation is an important concept in portfolio theory because

it is a measure of risk for a stock relative to the market.

it is a measure of risk for a portfolio.

it is a measure of the variability of a stock's return.

none of these answers are correct.

Question 2

1 Point

A statistic known as a stock's beta coefficient measures

total risk.

systemic or market risk.

unsystemic or business-specific risk.

none of these answers refer to what beta measures.

Question 3

1 Point

According to portfolio theory, the most relevant risk for any widely traded individual security is its

unsystemic risk.

standard deviation.

covariance risk.

systemic risk.

Question 4

1 Point

Over the twentieth century, which of the following was the highest rate?

equity returns

corporate debt returns

inflation rate

U.S. government debt returns

Question 5

1 Point

Risk aversion implies that an investor

demands a premium for accepting risk.

will not accept any risk.

places the same value on all risky investments.

assigns a negative value to risky investments.