CFA Practice Question

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CFA Practice Question

Standard deviation is a measure of ______.

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?
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