In the context of the Capital Asset Pricing Model (CAPM)the relevant measure of risk is
A)unique risk.
B)beta.
C)standard deviation of returns.
D)variance of returns.
E)none of the above.

Question

Quizplus · Accepted Answer

In the context of the CAPM, beta is the relevant measure of risk because it measures the relative volatility of an asset in relation to the broader market. This measure of risk is incorporated into the CAPM formula to determine the expected return of an asset. Unique risk, standard deviation, and variance are important measures of risk but are not as relevant in the context of the CAPM.

In the Context of the Capital Asset Pricing Model (CAPM)the