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The fundamental of CAPM is:
Suggested Answer: A
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17 comments · newest first
PO
Portia
1 month ago
A is clear. Systematic risk impacts expected returns.
DO
Doyle
1 month ago
D is off. Unsystematic risk is diversifiable.
AL
Aliza
2 months ago
A makes sense. It aligns with CAPM principles.
MA
Margot
2 months ago
C is confusing. It’s not about risk discount, right?
CH
Charisse
2 months ago
Definitely A. CAPM is all about market risk.
JA
Janet
2 months ago
B seems tempting, but unsystematic risk isn't the focus here.
JE
Jesusa
2 months ago
Agreed! Systematic risk drives the risk premium.
BE
Berry
2 months ago
I think A is the right choice. Systematic risk matters most.
DA
Daren
3 months ago
Surprised to see this focus on systematic risk only!
JE
Jerry
3 months ago
I thought it was more about the risk discount, but A makes sense.
MA
Maynard
3 months ago
Wait, isn't unsystematic risk important too?
CE
Celestina
3 months ago
Totally agree, it's all about that market risk!
JE
Jenelle
3 months ago
A) is correct! Systematic risk matters.
NO
Noel
4 months ago
I feel like I might be mixing up the definitions, but I think A is the right choice since it mentions systematic risk and risk premium.
HU
Huey
4 months ago
Unsure about the terms used here; I thought both systematic and unsystematic risks were important, but CAPM emphasizes one over the other.
DA
Dan
4 months ago
I remember practicing a question similar to this, and I think the risk premium is definitely tied to systematic risk.
LE
Leota
4 months ago
I think the CAPM focuses on systematic risk, but I'm not entirely sure if it's about the risk premium or risk discount.