The Measure of Risk Used in the Capital Asset Pricing

question 79

Multiple Choice

The measure of risk used in the Capital Asset Pricing Model is ___________.

• A) specific risk
• B) the standard deviation of returns
• C) reinvestment risk
• D) beta

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Definitions:

Capital Expenditure

Capital invested by an enterprise in procuring or upgrading solid assets such as land, manufacturing facilities, or hardware.

Equity Account

An account representing the owner's interest in the company, calculated as total assets minus total liabilities.

Intangible Asset

An asset that lacks physical substance, such as copyrights, trademarks, patents, and goodwill.

Amortization

Amortization refers to the process of gradually writing off the initial cost of an intangible asset over its useful life, reflecting its consumption or decline in value.