According to the Capital Asset Pricing Model (CAPM)a well diversified portfolio's rate of return is a function of
A)market risk.
B)unsystematic risk.
C)unique risk.
D)reinvestment risk.
E)none of the above.

Question

Quizplus · Accepted Answer

The CAPM suggests that the rate of return on a well-diversified portfolio is a function of market risk, which is measured by beta. Unsystematic risk, unique risk, and reinvestment risk are not considered in the CAPM as they are diversifiable and do not affect the overall return of a well-diversified portfolio.

According to the Capital Asset Pricing Model (CAPM)a Well Diversified