The systematic risk principle states that the expected return on a risky asset depends only on which one of the following?
A)unique risk
B)diversifiable risk
C)market risk
D)asset-specific risk
E)unsystematic risk

Question

Quizplus · Accepted Answer

The systematic risk principle, also known as the market risk principle, states that the expected return on a risky asset depends only on the market risk or systematic risk. This is the risk that affects the entire market or a particular segment of the market and cannot be diversified away. The other options, such as unique risk, diversifiable risk, asset-specific risk, and unsystematic risk, are different types of risks that can be diversified away or eliminated by holding a diversified portfolio.

The Systematic Risk Principle States That the Expected Return on a Risky