Need help with this question: Use the following three statements to answer this question: I. The...
Need help with this question:
Use the following three statements to answer this question:
I. The CAPM points out that rational investors should be compensated for unique risk.
II. The CAPM implies that non-systematic risk is the appropriate measure of risk to determine the risk premium required by investors for holding a risky security.
III. The expected return from non-systematic risk is
zero.
|
a |
I, II and III are correct. |
|
b |
I and II are incorrect, III is correct. |
|
c |
I, II are correct, III is incorrect. |
|
d |
I, III are incorrect, II is correct. |
Homework Answers
option b is correct option I and II are incorrect, III is correct
This is because unique risk is nonsystematic risk and non systematic risk is compensated by CAPM. CAPM only factors in systematic risk.
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