1. In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is
A. unique risk.
B. beta.
C. standard deviation of returns.
D. variance of returns.
Once a portfolio is diversified, the only risk remaining is systematic risk, which is measured by beta.
2. In the context of the Capital Asset Pricing Model (CAPM), the relevant risk is
A. unique risk.
B. systematic risk.
C. standard deviation of returns.
D. variance of returns.
Once a portfolio is diversified, the only risk remaining is systematic risk, which is measured by beta.
3. In the context of the Capital Asset Pricing Model (CAPM), the relevant risk is
A. unique risk.
B. market risk.
C. standard deviation of returns.
D. variance of returns.
Once a portfolio is diversified, the only risk remaining is systematic risk, which is measured by beta.
4. According to the Capital Asset Pricing Model (CAPM), a well diversified portfolio's rate of return is a
function
Of
A. market risk.
B. unsystematic risk.
C. unique risk.
D. reinvestment risk.
E. None of the options are correct.
With a diversified portfolio, the only risk remaining is market, or systematic, risk. This is the only risk that
influences return according to the CAPM.
5. According to the Capital Asset Pricing Model (CAPM), a well diversified portfolio's rate of return is a
function of
A. beta risk.
B. unsystematic risk.
C. unique risk.
D. reinvestment risk.
E. None of the options are correct.
With a diversified portfolio, the only risk remaining is market, beta, or systematic, risk. This is the only risk that
influences return according to the CAPM.
6. According to the Capital Asset Pricing Model (CAPM), a well diversified portfolio's rate of return is a
function of
Chapter 09 - The Capital Asset Pricing Model
Chapter 09
The Capital Asset Pricing Model
Multiple Choice Questions
1. In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is
A. unique risk.
B. beta.
C. standard deviation of returns.
D. variance of returns.
E. none of the above.
Once, a portfolio is diversified, the only risk remaining is systematic risk, which is measured
by beta.
Difficulty: Easy
3. In the context of the Capital Asset Pricing Model (CAPM) the relevant risk is
A. unique risk.
B. market risk
C. standard deviation of returns.
D. variance of returns.
E. none of the above.
Once, a portfolio is diversified, the only risk remaining is systematic risk, which is measured
by beta.
Difficulty: Easy
4. According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio's rate of
return is a function of
A. market risk
B. unsystematic risk
C. unique risk.
D. reinvestment risk.
E. none of the above.
With a diversified portfolio, the only risk remaining is market, or systematic, risk. This is the
only risk that influences return according to the CAPM.
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