According to the CAPM, the relevant measure of risk for a stock held in a diversified portfolio is the _____ risk.
A) unsystematic
B) systematic
C) diversified
D) total

Question

Quizplus · Accepted Answer

According to the CAPM, the relevant measure of risk for a stock held in a diversified portfolio is the systematic risk, which refers to the risk associated with the overall market, such as changes in interest rates, economic conditions, or geopolitical events. Unsystematic risk, on the other hand, refers to company-specific or industry-specific risks that can be diversified away when held in a well-diversified portfolio. Therefore, the answer is B, systematic risk.

According to the CAPM, the Relevant Measure of Risk for a Stock