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

Question

Quizplus · Accepted Answer

The CAPM states that the rate of return on a well-diversified portfolio is a function of the portfolio's beta risk, which measures the systematic risk inherent in the portfolio. The other options (B, C, and D) refer to types of unsystematic or specific risks that are not relevant to the CAPM.

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