Final answer:
Measuring the standard deviation of returns on the Wilshire 5000 index primarily captures total risk, as this index tracks a wide range of US-listed equities, encompassing both systematic and unsystematic risks.
Step-by-step explanation:
When you measure the standard deviation of returns on the Wilshire 5000 index, you are mostly measuring systematic risk. Systematic risk, also known as market risk, is the risk that is inherent in the overall market and cannot be diversified away. It is influenced by factors such as interest rates, economic conditions, and geopolitical events. The standard deviation of returns on the index reflects how much the index's returns fluctuate in response to these market-wide factors.
When measuring the standard deviation of returns on the Wilshire 5000 index, which includes the shares of essentially all U.S.-listed equities, you are predominantly measuring total risk. This is because the Wilshire 5000 encompasses a broad range of companies, capturing both the systematic risk (market risk) and the unsystematic risk (company-specific risk) inherent in the entire market. Systematic risk reflects economic, political, and social factors that affect the entire market, while unsystematic risk is unique to individual companies or industries. Since the Wilshire 5000 represents such a wide spectrum of the market, it essentially includes all the diversifiable and non-diversifiable risks.