Asked by
Christine Perez
on Oct 25, 2024
Verified
The higher the beta,
A) the smaller the diversifiable risk.
B) the smaller the nondiversifiable risk.
C) the larger the diversifiable risk.
D) the larger the nondiversifiable risk.
Nondiversifiable Risk
A type of risk inherent to the entire market or market segment that cannot be eliminated through diversification.
Beta
A financial metric that measures the volatility, or systemic risk, of a stock or portfolio compared to the market as a whole.
- Acquire knowledge on the distinction between diversifiable and nondiversifiable risk.
- Comprehend the implementation and calculation procedures of the Capital Asset Pricing Model (CAPM).
Verified Answer
GT
Learning Objectives
- Acquire knowledge on the distinction between diversifiable and nondiversifiable risk.
- Comprehend the implementation and calculation procedures of the Capital Asset Pricing Model (CAPM).