The Risk That Is Assumed to Be Rewarded for an Individual

question 39

Multiple Choice

The risk that is assumed to be rewarded for an individual stock under the capital asset pricing model is measured by the:

• A)portfolio standard deviation.
• B)portfolio beta.
• C)individual stock's standard deviation.
• D)individual stock's beta.

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Definitions:

Residual Value

The estimated value of an asset at the end of its useful life or lease term.

Depreciation Expense

the systematic allocation of the cost of a tangible asset over its useful life.

Goodwill

An intangible asset that arises when a business is acquired for more than its fair value, attributed to factors like reputation, brand, and customer relationships.

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable parties in an arm's length transaction.