A particular risky asset's risk premium, measured relative to its beta coefficient, is its:
A) Diversifiable risk.
B) Systematic risk.
C) Reward to risk ratio.
D) Security market line.
E) Market risk premium.

Question

Quizplus · Accepted Answer

The risk premium of a risky asset, when measured relative to its beta coefficient, is referred to as its reward to risk ratio. This ratio indicates the amount of excess return (or risk premium) an investor expects to receive per unit of risk (beta) taken, aligning with the concept of the Capital Asset Pricing Model (CAPM).

A Particular Risky Asset's Risk Premium, Measured Relative to Its