In the capital asset pricing model, the beta coefficient is a measure of ________.
A) business-specific risk
B) maturity risk
C) market risk
D) unsystematic risk

Question

Quizplus · Accepted Answer

The beta coefficient in the capital asset pricing model measures the sensitivity of an asset's returns to market risk, representing the systematic risk of an investment. Therefore, the correct choice is (C) market risk. The other options are incorrect because beta does not measure business-specific risk (A), maturity risk (B), or unsystematic risk (D).

In the Capital Asset Pricing Model, the Beta Coefficient Is