What metric is the most relevant measure of any stock/s risk? Explain your answer.

Expert Solution

STANDARD DEVIATION is the most relevant measure of the risk associated with the stock because standard deviation is not just including the systematic risk associated with the stock, but it is also including the idiosyncratic risk associated with the investment.

Standard deviation will be reflecting the overall risk associated with investment in relation to the stock because standard deviation believes that individual stock do have unsystematic risk and is not completely eliminated and it is also believing that there are systematic factors in the market which are impacting the overall rate of return of the stock and it is also reflected the volatility of the return of the stocks in a certain time frame so it is a well defined measure which will be providing us with the perception of the risk which is associated with the overall investment into the stocks.

Beta is only representative of the systematic risk and hence we are not considering beta.

Hence, it can be said that standard deviation is the most important metric which will be applied when we will be considering risk associated with the investment in stock.

jeff jeffy answered 2 years ago

explain why CAPM beta is thought to be a more relevant measure of risk than standard...

explain why CAPM beta is thought to be a more relevant measure of risk than standard deviation for a well-diversified investor

In your own words, explain what is meant by OH&S risk and risk assessment.

What statistical measure do we initially use for the relevant or non-diversifiable risk?

Explain why most macroeconomists do not need to precisely measure the initial capital stock in their...

Explain why most macroeconomists do not need to precisely measure the initial capital stock in their data in order to good idea of the recent size (value) of the capital stock. For example how could an extended data set on investment be used to create an estimate for the capital stock. Your answer should have an equation in it and explanation of which variables are measurable and if so how they are typically measured.

Answer the following, citing relevant legislation and case law in your answer: a) What is the...

Answer the following, citing relevant legislation and case law in your answer: a) What is the parol evidence rule, and what is the court’s reasoning in applying the rule? (Maximum 100 words) b) List and explain the exceptions to the parol evidence rule. (Maximum 350 words)

Answer the following, citing relevant legislation and case law in your answer: a) What is the...

Answer the following, citing relevant legislation and case law in your answer: a) What is the parol evidence rule, and what is the court’s reasoning in applying the rule? (Maximum 100 words) b) List and explain the exceptions to the parol evidence rule. (Maximum 350 words) REFERENCE PLEASE

Population(s) affected: What population(s) is/are at highest risk of contracting the disease? Are there any groups...

Population(s) affected: What population(s) is/are at highest risk of contracting the disease? Are there any groups of people who should be tested? Please include statistical/geographical data and trends (from the Centers for Disease Control and Prevention, World Health Organization, or other source [http://www.cdc.gov, http://www.who.int, etc.]).

Be sure your answer is complete and include any relevant diagrams and examples. 3 paragraphs minimum....

Be sure your answer is complete and include any relevant diagrams and examples. 3 paragraphs minimum. Deciding to commit a crime is a rational decision. Explain why we make this statement. What benefits and what costs do a criminal incur when committing a crime? Using this concept of rationality, what policies can be used to reduce the amount of crime?

Explain stock split with relevant example?

General equilibrium models of asset pricing allow us to determine the relevant measure of risk for...

General equilibrium models of asset pricing allow us to determine the relevant measure of risk for any asset and the relationship between expected return and risk. Two of these models have been subject to fierce debate among practitioners and academics, The Capital Asset Pricing Model (CAPM) and The Arbitrage Pricing Model (APT). Based on the assumptions and tests of each model you are asked to: 1. Critically analyse the assumptions of both models. 2. Discuss the similarities and differences between...

Question

What metric is the most relevant measure of any stock/s risk? Explain your answer.

Solutions

Expert Solution

Related Solutions

explain why CAPM beta is thought to be a more relevant measure of risk than standard...

In your own words, explain what is meant by OH&S risk and risk assessment.

What statistical measure do we initially use for the relevant or non-diversifiable risk?

Explain why most macroeconomists do not need to precisely measure the initial capital stock in their...

Answer the following, citing relevant legislation and case law in your answer: a) What is the...

Answer the following, citing relevant legislation and case law in your answer: a) What is the...

Population(s) affected: What population(s) is/are at highest risk of contracting the disease? Are there any groups...

Be sure your answer is complete and include any relevant diagrams and examples. 3 paragraphs minimum....

Explain stock split with relevant example?

General equilibrium models of asset pricing allow us to determine the relevant measure of risk for...