According to the Capital Asset Pricing Model, investors are primarily concerned with portfolio risk, not the risks of individual stocks held in isolation.Thus, the relevant risk of a stock is the stock's contribution to the riskiness of a well-diversified portfolio.

Question

Quizplus · Accepted Answer

This statement is true. According to the Capital Asset Pricing Model, investors are concerned with the overall risk of their portfolio, rather than the risk of individual stocks in isolation. The relevant risk of a stock is its contribution to the overall riskiness of a well-diversified portfolio.

According to the Capital Asset Pricing Model, Investors Are Primarily