The risk factor in CAPM is beta which is a proxy for how fir

The risk factor in CAPM is beta which is a proxy for how firm\'s stock price moves compared with the market portfolio

True

False

Solution

The Asnwer is\"TRUE\"

Beta in Capital Asset Pricing Mode [CAPM] is a measure of non diversifiable risk which shows how firms stock prices changes with the market forces. The Measure of Beta can be either positive or negative. The term Beta also means Beta measures the risk of an individual stock components to the market portfolio