Finance · Capital Asset Pricing Model
Statement I: CAPM explains the expected return of a security as a function of systematic risk measured by beta. Statement II: Unsystematic risk can be diversified away in a well-constructed portfolio.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect but Statement II is correct
- 2Statement I is correct but Statement II is incorrect
- 3Both statements are incorrect
- 4Both statements are correct✓
Correct answer
Both statements are correct
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