Q825
Stock with large amount of contribution of risk in a diversified portfolio is represented by
A.
high beta and standard deviation
AnswerB.
high beta, low standard deviation
C.
low beta, low standard deviation
D.
low beta, low variance
Answer: Option A
Solution
Answer: Option A
Solution:
Stock with large amount of contribution of risk in a diversified portfolio is represented by high beta and standard deviation. Beta and standard deviation are measures by which a portfolio or fund's level of risk is calculated. Beta compares the volatility of an investment to a relevant benchmark while standard deviation compares an investment's volatility to the average return over a period of time.