Total risk in a security is usual measured by ? a) Range b) standard deviation c) beta d) co eficient of variation

b) standard deviation

SD measures the variation in the values of the variables. it is used as the measurement of the total risk (i.e. systematic & unsystematic risk. The absolute vale of the SDs do not convey any meaning.

But in comparison we can rank them of the basis of risk involved. Example:-

SD         A           B           C

             10          15        12

A= min. risk

B= max Risk

C= > A but < B risk 

b) Standard deviation.

Beta is a measure of a stock's volatility in relation to the market. In other words, it indicates only the market risk, and not the total risk. Standard deviation, on the other hand, indicates total risk.

B) Standard deviation

 

In an undiversified security ( both systematic and unsystematic risk occur) we use the standard diviation or coefficient of variation ( both are related).

 

Beta coefficient is used to measure risk of a diversified security ( only systematic risk )

B,,,,,,

b) std deviation

Standard deviation 

B

The standard deviation is calculated as the positive square root of the variance.

Answer B - Standard deviation

it is b

The Answer B

(C). In finance, the beta (β) of an investment is a measure of the risk arising from exposure to general market movements as opposed to idiosyncratic factors. The market portfolio of all investable assets has a beta of exactly1. A beta below1 can indicate either an investment with lower volatility than the market, or a volatile investment whose price movements are not highly correlated with the market. An example of the first is a treasury bill: the price does not go up or down a lot, so it has a low beta. An example of the second is gold. The price of gold does go up and down a lot, but not in the same direction or at the same time as the market.