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Homework answers / question archive / 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

Finance

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

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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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