Of the options listed below, which is the best measure of systematic risk?

Question

BlackTom AI · Accepted Answer

Question restatement: Of the options listed below, which is the best measure of systematic risk?
Options: The weighted average standard deviation; The arithmetic average; Beta; The geometric average; The standard deviation.
Option 1: The weighted average standard deviation. This would not capture market-wide risk specifically; standard deviation measures total volatility, not the portion attributable to market movements, and a weighted approach here does not isolate systematic risk.
Option 2: The arithmetic average. An arithmetic mean summarizes central tendency of returns or values, not risk exposure to systematic factors, so it fails to quantify systematic risk.
Option 3: Beta. Beta measures a security's sensitivity to movements in the overall market, i.e., its covariance with the market divided by the market variance. This directly captures systematic (non-diversifiable) risk, making it the best measure among the choices for systematic risk.
Option 4: The geometric average. The geometric mean describes compound growth rates over time and is not a measure of risk, nor of systematic risk specifically.
Option 5: The standard deviation. While standard deviation assesses total volatility, it does not isolate the portion due to market-wide movements; it conflates systematic and unsystematic risk, so it’s not the best measure of systematic risk.
In summary, among the given options, Beta uniquely quantifies how much a security’s returns move with the market, aligning directly with the concept of systematic risk, whereas the others describe general risk or average outcomes without tying them to market risk exposure.

BUSFIN 3220 AU2025 (2110) Exam 3 - Requires Respondus LockDown Browser

Of the options listed below, which is the best measure of systematic risk?

查看解析

登录即可查看完整答案

类似问题

Select the correct statement regarding systematic and unsystematic risk.

Which of the following statements about systematic risk is/are true?

Of the options listed below, which is the best example of systematic risk?

What is beta in financial terms?

Which of the following is not an example of factors that affect systematic risk?

Which of the following types of investment risk cannot be eliminated through diversification?

Systematic risk...

Energy cost is an example of …………

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单