请问

问题如下：

Which statement best explains why the CAPM may be inappropriate for estimating required return on equity for private firms?

选项：

The CAPM was only designed for publicly traded stocks

The CAPM does not utilize a company-specific risk premium.

The CAPM assumes investors are well diversified.

解释：

C is correct. Private company owners are rarely well diversified, as much of their wealth is tied up in their company. CAPM assumes that investors are only exposed to market risk, not the total risk of a company. B is incorrect, as the CAPM includes a company-specific risk component measured by beta multiplied by the equity risk premium. A is incorrect, as the CAPM can measure the expected return of any financial asset, not just traded stocks.