According to the CAPM, investors are compensated for all but which of the following?
A) expected inflation
B) systematic risk
C) time value of money
D) residual risk

Question

Quizplus · Accepted Answer

According to the CAPM, investors are compensated for systematic risk which is measured by beta. This compensation is called the risk premium. In addition, time value of money and expected inflation are also factors that impact investors' compensation. However, residual risk is not compensated for because it is considered unsystematic and can be diversified away by holding a portfolio of stocks.

According to the CAPM, Investors Are Compensated for All but Which