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Basic Question 3 of 8
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
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? |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk
CFA® 2024 Level I Curriculum, Volume 2, Module 2.