In the Context of the Capital Asset Pricing Model (CAPM)the

question 38

Multiple Choice

In the context of the Capital Asset Pricing Model (CAPM) the relevant risk is

• A)unique risk.
• B)systematic risk.
• C)standard deviation of returns.
• D)variance of returns.
• E)none of the above.

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Definitions:

Quarterly Compounded Nominal Rate

A nominal interest rate compounded four times a year.

Effective Rate

The annual interest rate that accounts for compounding within the year.

Compounded Annually

The process where interest earned is added to the principal sum once a year, and future interest is earned on the new total.

Compounded Nominal Annual Rate

The rate of interest for one year, without taking inflation into account, which is compounded at specified intervals within that year.