In the CAPM, the risk to a stock's return that is attributable to the fluctuations in the overall stock market is referred to as

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The risk to a stock's return that is caused by factors that affect the broader market, such as economic events or geopolitical risks, is known as systematic risk. This type of risk cannot be diversified away and is measured by beta in the CAPM. Idiosyncratic or unsystematic risk, on the other hand, is the risk that is specific to a particular stock or industry and can be diversified away through portfolio diversification. Explicit risk is not a term typically used in the CAPM.

In the CAPM, the Risk to a Stock's Return That