According to Capital Asset Pricing Theory, the Key Determinant of Portfolio

question 59

Multiple Choice

According to capital asset pricing theory, the key determinant of portfolio returns is ________.

• A) the degree of diversification
• B) the systematic risk of the portfolio
• C) the firm-specific risk of the portfolio
• D) economic factors

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Definitions:

Stock Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specified quantity of a stock at a set price within a certain time period.

Expiration Time

The specific date and time when an options or futures contract becomes void and the rights to exercise it cease.

Call Contract

An options contract that gives the holder the right to buy an underlying asset at a specified price within a certain period.

Write

In finance, this term often refers to the act of selling a derivative contract, such as an option, thus obligating the writer to fulfill the contract terms if exercised.