Question

A stock’s stand-alone risk is measured by:

Group of answer choices

standard deviation

beta

expected return

WACC

Answer 1

A stock’s stand-alone risk is measured by:

Answer : standard deviation [Thumbs up please]

Standard deviation is overall risk of the stock : both systematic and unsystematic.

when we study stock in isolation, standard deviation is proper measure.

beta measures systematic risk, that is how much stock changes with changes with overall market. so it does not measure total risk of stock, it measures only one part of risk.

Expected return is return expected from stock in a year with different scenarios. it is return not risk.

WACC is the average risk of the whole firm and not for a stock