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:

Expense Ratio

A measure of the total cost of managing and operating a fund, including administrative and management fees, expressed as a percentage of the fund's total assets.

Mutual Fund

This is a fund that amasses capital from numerous investors to make investments in different securities like stocks, bonds, and money market assets.

Turnover Ratio

A financial metric that measures the rate at which an investment or a portfolio of investments is bought and sold over a particular period.

Average Daily Assets

The average value of assets held by an individual or entity over a specified period, calculated by averaging the asset values at the beginning and end of the period.