- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 2. Portfolio Risk and Return: Part II
- Subject 2. Systematic Risk and Unsystematic Risk
CFA Practice Question
Standard deviation is a measure of ______.
B. unsystematic risk
C. total risk
D. diversifiable risk
A. systematic risk
B. unsystematic risk
C. total risk
D. diversifiable risk
Correct Answer: C
Risk is the uncertainty concerning the outcome of an investment or other situation. It is often defined as the variability of returns from an investment. The greater the range of possible outcomes, the greater the risk.
User Contributed Comments 6
| User | Comment |
|---|---|
| sergashev | good question |
| nike12 | Can someone pls explain the difference between systematic and unsystematic risk? |
| BigJimStud | Systematic risk is market risk which you cannot diversify away. Unsystematic risk is the risk inherent to the asset itself. BY adding more and more assets to a portfolio you diversify this type of risk away to the point where it's neglible, leaving only the market risk which obviously can never be diversified away. Std Deviation and variance cover both |
| sarathbs | Thanks BigJim |
| davcer | std dev= total risk beta=systematic risk |
| ibrahim18 | @BogJimStud. how did you get here? |