Which Two of the Statements Accurately Relate to Unsystematic Risk

question 18

Multiple Choice

Which two of the statements accurately relate to unsystematic risk?

• A) Unsystematic risk can be accurately measured using beta.
• B) Unsystematic risk highlights risks common to all firms.
• C) An efficient market will not reward unsystematic risk.
• D) Unsystematic risk can be eliminated by diversification.

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Definitions:

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, often used by companies to conserve cash.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Common Stock

Equity instruments that grant the owner the right to receive dividends, which can fluctuate in value and are not guaranteed, reflecting the company's performance.

Par Common Stock

Common stock issued with a nominal or face value, used primarily for accounting purposes and often set at a low amount.