If the rate of return on the stock market is rm and the rate of return

If the rate of return on the stock market is rm and the rate of return on a risk-free asset is rf, then

A) rm – rf measures the risk, all of it nondiversifiable, one has to accept in the stock market.
B) rm – rf measures the risk, all of it diversifiable, one has to accept in the stock market.
C) rm + rf measures the risk, all of it nondiversifiable, one has to accept in the stock market.
D) rm + rf measures the risk, all of it diversifiable, one has to accept in the stock market.
E) rm rf measures the stock market’s total risk.

ANSWER

A