The CAPM asserts that the only company specific factor affecting required return is:
A)market risk.
B)the risk-free rate.
C)investment risk.
D)risk aversion.

Question

Quizplus · Accepted Answer

According to the CAPM, the required return of an investment is determined by the market risk, as measured by the beta coefficient. The risk-free rate and risk aversion are assumed to be constant for all investors, and investment risk is already captured by the market risk factor. Therefore, the only company-specific factor affecting required return is market risk.

The CAPM Asserts That the Only Company Specific Factor Affecting