According to the Capital Asset Pricing Model, investors are primarily concerned with portfolio risk, not the risks of individual stocks held in isolation.Thus, the relevant risk of a stock is the stock's contribution to the riskiness of a well-diversified portfolio.

Question

Quizplus · Accepted Answer

This is correct based on the principles of the Capital Asset Pricing Model (CAPM). The model emphasizes the importance of portfolio risk and how individual stocks contribute to that risk, rather than just looking at the risks of individual stocks in isolation.

According to the Capital Asset Pricing Model, Investors Are Primarily