A stock's standard deviation indicates how the stock affects the riskiness of a diversified portfolio. Therefore, the standard deviation is a better measure of a stock's relevant risk than its beta coefficient,which measures total, or stand-alone, risk.
Answer the following statement true (T) or false (F)
False
A stock's beta coefficient indicates how the stock affects the riskiness of a diversified portfolio, therefore it is a better measure of a stock's relevant risk than standard deviation, which measures total, or stand-alone, risk. See 8-3: Portfolio Risk—Holding Combinations of Investments
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