Question

While ________ seems to be a reasonable measure of risk when evaluating a large portfolio, the

________ of an individual security does not explain the size of its average return.
A) volatility, volatility
B) the mean return, standard deviation
C) mode, volatility
D) mode, mean return

Answer 1

A) volatility, volatility

Step-by-step explanation:

Volatility refers to the change in returns as measured with the standard deviation with change in trading price series.

When we evaluate a large portfolio with various kinds of securities and investment, the volatility helps the best to access the risk factor present in it.

Whereas the risk can not be measured through the volatility of an individual security, as there will not be major effect of change in prices, on other securities.

As the volatility factor is in correspondence of other factors, as well.