A common criticism of the CAPM is that it
A)ignores the return on the market portfolio.
B)uses too many factors.
C)requires only a single measure of systematic risk.
D)ignores the risk-free rate of return.

Question

Quizplus · Accepted Answer

The CAPM assumes that a security's or portfolio's systematic risk is determined by its beta, which is calculated using only one measure of systematic risk. This oversimplification of risk can lead to inaccurate estimates of expected returns and may be a critique of the model.

A Common Criticism of the CAPM Is That It