💼 Pre-MBA Exam Prep

Beta in the CAPM model measures:

A Total risk
B A stock systematic risk relative to the overall market
C Unsystematic risk only
D Bond risk

✓ Correct Answer: Option B

Beta measures systematic (market) risk. Beta=1 means stock moves with market. Beta>1: more volatile than market. Beta<1: less volatile. CAPM: E(R) = Rf + β(Rm-Rf).

Related Pre-MBA Exam Prep Questions