In the Capital Asset Pricing Model (CAPM),the term Beta, ,is:
A)a measure of systematic risk inherent in a security
B)calculated as the "covariance of future returns between a specific security and the market portfolio" divided by the "variance of returns of the market portfolio"
C)a and b
D)none of these

Question

In the Capital Asset Pricing Model (CAPM),the term Beta,  ,is:
A)a measure of systematic risk inherent in a security 
B)calculated as the "covariance of future returns between a specific security and the market portfolio" divided by the "variance of returns of the market portfolio" 
C)a and b 
D)none of these

Quizplus · Accepted Answer

Beta is a measure of systematic risk inherent in a security and is calculated as the "covariance of future returns between a specific security and the market portfolio" divided by the "variance of returns of the market portfolio". Therefore, both options A and B are correct, making option C the best choice. Option D is incorrect as both A and B are true statements regarding Beta in CAPM.

In the Capital Asset Pricing Model (CAPM),the Term Beta