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In the CAPM, the amount of risk that stock contributes to the portfolio of market is classified as Select one: O a
In the CAPM, the amount of risk that stock contributes to the portfolio of market is classified as Select one: O a. None of the options O b. Diversification c. Risk Free Return d. Beta Coefficient e. Return
Expert Solution
Diversification is the technique where an investor will invest in multiple asset classes to minimize risk
Risk free return is the return earned on owning a risk free asset (T-bill)
Beta is a measure of risk of a particular asset. It measures relative risk of the asset as compared to a benchmark.
It essentially measures the systematic risk of a particular stock as compared to the market as a whole.
Hence the correct answer is
Option D: Beta coefficent
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