Asked by
Jocel Flores
on Oct 20, 2024
Verified
According to capital asset pricing theory, the key determinant of portfolio returns is ________.
A) the degree of diversification
B) the systematic risk of the portfolio
C) the firm-specific risk of the portfolio
D) economic factors
Portfolio Returns
The overall gains or losses generated by a portfolio of investments over a specific period, assessing the effectiveness of investment choices.
Systematic Risk
Refers to the risk inherent to the entire market or market segment, which cannot be mitigated through diversification.
Diversification
The process of allocating investments across various financial assets to reduce the risk exposure of a portfolio.
- Become familiar with the crucial aspects of portfolio theory, encompassing diversification, beta, and the efficient frontier.
- Acquire knowledge of the core aspects and impacts of the Capital Asset Pricing Model (CAPM).
Verified Answer
AA
Learning Objectives
- Become familiar with the crucial aspects of portfolio theory, encompassing diversification, beta, and the efficient frontier.
- Acquire knowledge of the core aspects and impacts of the Capital Asset Pricing Model (CAPM).