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According to the CAPM, the Relevant Measure of Risk for a Stock

question 16

Multiple Choice

According to the CAPM, the relevant measure of risk for a stock held in a diversified portfolio is the _____ risk.


Definitions:

Consumer Satisfaction

A measure of how products and services supplied by a company meet or surpass customer expectation.

Diminishing Marginal Utility

The principle that as a person consumes more of a product, there is a decline in the additional satisfaction or utility that person derives from consuming one more unit of the product.

Equality-Efficiency Trade-Off

This concept deals with the balance or compromise between achieving a more equitable distribution of resources and maximizing economic efficiency.

Income Equality

A situation in which earnings are distributed evenly across members of a society, reducing income disparities.

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