Capital asset pricing theory asserts that portfolio returns are best explained by
A) reinvestment risk.
B) specific risk.
C) systematic risk.
D) diversification.

Question

Quizplus · Accepted Answer

Capital asset pricing theory (CAPT) posits that the expected return on a portfolio or an investment is primarily determined by its exposure to systematic risk, which is the risk inherent to the entire market or market segment, not by specific risk, reinvestment risk, or diversification strategies.

Capital Asset Pricing Theory Asserts That Portfolio Returns Are Best