In the capital asset pricing model, the beta coefficient is a measure of ________ risk and an index of the degree of movement of an asset's return in response to a change in ________.
A) diversifiable; the prime rate
B) nondiversifiable; the Treasury bill rate
C) diversifiable; the bond index rate
D) nondiversifiable; the market return

Question

Quizplus · Accepted Answer

The beta coefficient in the capital asset pricing model (CAPM) measures nondiversifiable risk, also known as systematic risk, and indicates how much an asset's return is expected to move in response to changes in the overall market return.

In the Capital Asset Pricing Model, the Beta Coefficient Is