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).

💡 Why is B) the correct answer?

The correct answer to the question "Beta in the CAPM model measures:" is Option B: A stock systematic risk relative to the overall market.

The other options — A) Total risk, C) Unsystematic risk only, D) Bond risk — are incorrect for this Pre-MBA Exam Prep question. As explained above: Beta measures systematic (market) risk. Beta=1 means stock moves with market. Beta>1: more volatile than market. Beta

📚 About This Pre-MBA Exam Prep Practice Question

This 3-level Pre-MBA Exam Prep question from the Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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Beta in the CAPM model measures:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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