The systematic risk principle implies that the _____ an asset depends only on that asset's systematic risk.
A) variance of the returns on
B) standard deviation of the returns on
C) expected return on
D) total risk assumed by owning
E) diversiﬁcation beneﬁts of

Question

Quizplus · Accepted Answer

The systematic risk principle states that the expected return on an asset is determined by its systematic risk, as this is the risk that cannot be diversified away and is relevant for pricing.

The Systematic Risk Principle Implies That the _____ an Asset