One key conclusion of the capital asset pricing model is that the value an asset should be measured by considers both the risk and the expected return of the asset assuming that the asset is held in a well-diversified portfolio.The risk of the asset held in isolation is not relevant under the CAPM.

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The CAPM emphasizes that the relevant risk of an asset is its contribution to the risk of a well-diversified portfolio. Therefore, the risk of an asset held in isolation is not considered in the CAPM. Instead, the CAPM considers the systematic risk, measured by beta, which indicates the relationship between the asset and the market portfolio. The expected return of an asset is determined by its beta, the market risk premium, and the risk-free rate.

One Key Conclusion of the Capital Asset Pricing Model Is