Question: Why should diversifiable risk be ignored by investors when estimating expected returns with the capital asset pricing model (CAPM)? beta includes a component of diversifiable

Why should diversifiable risk be ignored by investors when estimating expected returns with the capital asset pricing model (CAPM)?

beta includes a component of diversifiable risk

diversifiable risk can be diversified away

diversifiable risk cannot be quantified

diversifiable risk is included in the market risk premium

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