The CAPM assumes that the only relevant source of risk arises from
A) industry factors
B) labor income
C) variations in stock returns
D) financial distress
E) firm return standard deviation

Question

Quizplus · Accepted Answer

The CAPM assumes that the only relevant source of risk arises from variations in stock returns, which is measured by the market portfolio's return standard deviation. Industry factors, labor income, financial distress, and firm return standard deviation are not considered as relevant sources of risk in the CAPM model.

The CAPM Assumes That the Only Relevant Source of Risk