- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 53. Portfolio Risk and Return: Part II
- Subject 2. Pricing of Risk and Computation of Expected Return

###
**CFA Practice Question**

Which of the following is a misconception about beta?

A. Beta can be viewed as a standard measure of systematic risk.

B. Beta is the relevant measure of risk in the CAPM and is equivalent to unsystematic risk.

C. Beta is defined as the covariance between the security or portfolio and the market portfolio divided by the variance of the market portfolio.

**Explanation:**Beta measures systematic (not unsystematic) risk.

###
**User Contributed Comments**
0

You need to log in first to add your comment.