We use Beta as a measurement of investment risk because ______. A. Beta measures the diversifiable...

We use Beta as a measurement of investment risk because ______.

	A.	Beta measures the diversifiable risk that investors care about the most
	B.	Standard deviation is a less accurate measure of riskiness than beta
	C.	Beta measures the non-diversifiable risk that investors cannot avoid
	D.	Beta measures the entire riskiness of the investment

Expert Solution

Risk Means deviation from expected ret. It is measured with "SD".
SD specifies Total Risk
Total Risk can be classified into two
1. Systematic Risk - Risk associated with Market. It can't be diversified.
2. Unsystematic Risk - Risk that is organization specific.It can be diversified through proper diversification startegy.

As Unsystematic risk is diversifiable, we will consider Systematicrisk alone for decision making.

OPtion C is correct

jeff jeffy answered 3 years ago

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We use Beta as a measurement of investment risk because ______. A. Beta measures the diversifiable...

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