- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 2. Portfolio Risk and Return: Part II
- Subject 5. The Capital Asset Pricing Model
CFA Practice Question
Capital asset pricing theory asserts that portfolio returns are best explained by ______.
B. specific risk
C. systematic risk
D. diversification
A. economic factors
B. specific risk
C. systematic risk
D. diversification
Correct Answer: C
User Contributed Comments 6
| User | Comment |
|---|---|
| Poorvi | can anyone explain? |
| kodali | Risk that can not be diversified |
| mattg | Systematic risk (beta) is unavoidable, even with proper diversification |
| jpducros | CAPM --> SML graph --> Expected return expressed in function of systematic risk (Beta). |
| thekobe | look at the Capm formula, it includes Beta which refers to systematic risk |
| zriddle | The individual stock is not included in the formula. The only variables are Market, rf, and Beta. |