Question

2. Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio? a. Variance; correlation coefficient. b. Standard deviation; correlation coefficient. c. Beta; variance. d. Coefficient of variation; beta. e. Beta; beta.

Answer 1

d. Coefficient of variation; beta.

Step-by-step explanation:

Coefficient of variation can be regarded as the best measure of risk for a single asset held in isolation. In finance Coefficient of variation is very essential because it helps business owner as well as other investors to know the volatility as compare with the profit/dividend that would be generated from what then invested.

beta on the other hand, can be regarded as the best measure for an asset held in a diversified portfolio. It gives the measurement of how stock is going up and down in the general/overall stock market,it helps to measure individual Asset as far as the overall stock market is concern.