According to the SML, investors are rewarded for bearing market risk and not for bearing business-specific risk.

Name: According to the SML, investors are rewarded for bearing market risk and not for bearing business-specific risk.
Brand: Quizplus
Rating: 4.7 (35 reviews)

Question

Quizplus · Accepted Answer

The SML asserts that investors are compensated for exposure to systematic or market risk, not for company-specific or unsystematic risk. This is because market risk cannot be diversified away, whereas unsystematic risk can be reduced by diversifying a portfolio.

According to the SML, Investors Are Rewarded for Bearing Market