One key conclusion of the Capital Asset Pricing Model is that the value of an asset should be measured by considering both the risk and the expected return of the asset, assuming that the asset is held in a well-diversified portfolio.The risk of the asset held in isolation is not relevant under the CAPM.

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CAPM posits that the risk and expected return of an asset should be evaluated based on its contribution to the risk and return of a diversified portfolio, not on its standalone risk. This is because CAPM assumes investors hold diversified portfolios to minimize unsystematic risk, focusing on the asset's market risk (systematic risk) instead.

One Key Conclusion of the Capital Asset Pricing Model Is