Answer-According to the Capital Asset Pricing Model (CAPM), the relevant risk of a security is its:

The CAPM is a cornerstone of modern portfolio theory. It makes a crucial distinction Total Risk measured by variance or standard deviation includes both systematic and unsystematic risk. Unsystematic Firm-specific Risk Risk unique to a company e.g., management quality, product failure. This risk can be diversified away by holding a large portfolio. Systematic Market Risk Risk that affects the entire market e.g., interest rate changes, recessions, wars. It cannot be diversified away . CAPM posits that in an efficient market, investors are only rewarded for bearing non-diversifiable systematic risk . This risk is measured by Beta , which quantifies a securitys sensitivity to movements in the overall market.