The measure of risk used in the Capital Asset Pricing Model is ___________.
A) specific risk
B) the standard deviation of returns
C) reinvestment risk
D) beta

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) uses beta as the measure of risk. Beta measures the systematic risk of an asset in relation to the overall market. Specific risk, standard deviation of returns, and reinvestment risk are all important concepts in finance, but they are not used in the CAPM to measure risk.

The Measure of Risk Used in the Capital Asset Pricing