The riskiness of an asset is measured by A) the magnitude of its return. B) the absolute value of any change in the asse...
The riskiness of an asset is measured by
A) the magnitude of its return.
B) the absolute value of any change in the asset's price.
C) the standard deviation of its return.
D) risk is impossible to measure.
Homework Answers
Ans. Option c
Explanation: standard deviation is a measure of dispersion. This method is used to compare the variability of cash flows from different projects with their respective means (i.e. expected values).
The project having greater standard deviation is ranked as more risky.
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