The risk that is assumed to be rewarded for an individual stock under the capital asset pricing model is measured by the

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The risk that is assumed to be rewarded for an individual stock under the capital asset pricing model is measured by the stock's beta, which measures the sensitivity of the stock's returns to the overall market. The individual stock's standard deviation is a measure of total risk, including company-specific risk, and is not directly used in the calculation of expected return in the CAPM. The portfolio standard deviation and portfolio beta are measures of risk for a portfolio, rather than an individual stock.

The Risk That Is Assumed to Be Rewarded for an Individual