The capital asset pricing model specifies that relative risk is a sufficient descriptor of security risk. This result holds under both the Sharpe-Lintner version,

and the more general Black version of the model,

where
= expected rate of return on asset i,
Rf = riskless rate of interest,
= expected return on the market portfolio,
= expected return on any “zero-beta” asset or portfolio of such assests, and
= relative risk of asset i in the market portfolio of assests.