Question

How does the CAPM address the risks associated with investing in individual shares?

a.

By diversifying investments across multiple shares to cancel out specific risks

b.

By focusing solely on the risks specific to individual shares

c.

By eliminating all risks associated with investing in the stock market

d.

By prioritizing high-risk investments to maximize returns

Answer: (a).By diversifying investments across multiple shares to cancel out specific risks Explanation:The CAPM addresses the risks associated with investing in individual shares by diversifying investments across multiple shares to cancel out specific risks, leaving only the systematic or non-specific risks inherent in the stock market.

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Q. How does the CAPM address the risks associated with investing in individual shares?

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