expected value
portfolio beta
weighted average of individual risk
standard deviation
Answer is Right!
Answer is Wrong!
The correct answer is: D. standard deviation.
Standard deviation is a measure of the dispersion of a set of data from its mean. A low standard deviation indicates that the data points tend to be very close to the mean, while a high standard deviation indicates that the data points are spread out over a large range of values.
In the context of portfolio risk, standard deviation is a measure of how much the value of a portfolio is likely to fluctuate over time. A low standard deviation indicates that the value of the portfolio is relatively stable, while a high standard deviation indicates that the value of the portfolio is more volatile.
The other options are incorrect because:
- Expected value is the average of the possible values of a random variable. It is not a measure of risk.
- Portfolio beta is a measure of the sensitivity of a portfolio’s returns to the returns of the market portfolio. It is not a measure of risk.
- Weighted average of individual risk is a measure of the total risk of a portfolio, but it does not take into account the correlation between the assets in the portfolio. This means that it can be misleading as a measure of portfolio risk.