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

question 27

Multiple Choice

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

• A) unique risk.
• B) beta.
• C) standard deviation of returns.
• D) variance of returns.

---

Definitions:

Incremental Analysis

The process of comparing the additional costs and benefits of different alternatives in order to make decisions.

Unprofitable Segment

A division or business unit within a company that consistently generates losses instead of profits, affecting the overall financial health of the company.

Manufacturing Variances

Differences between the actual costs and standard (expected) costs incurred during production, which can be categorized into material, labor, and overhead variances.

Incremental Analysis

The process of identifying the financial data that changes under alternative courses of action, used for decision-making in business.