The asset beta in the Capital Asset Pricing Model is a moderate number that measures:

A) how sensitive the asset's return is to market movements.
B) how sensitive the asset's discount rate is to changes in inflation.
C) the risk premium on the stock market.
D) the risk premium on an individual stock.

Asset Beta

A constant that measures the sensitivity of an asset’s return to market movements and, therefore, the asset’s nondiversifiable risk.

Market Movements

Market Movements refer to the changes and trends in market prices and volumes over time, influenced by various factors including economic indicators, investor sentiment, and external events.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from a central bank's discount window.