Which of the Following Statements Is FALSE

question 75

Multiple Choice

Which of the following statements is FALSE?

• A)Firm-specific news is good or bad news about the company itself.
• B)Firms are affected by both systematic and firm-specific risk.
• C)When firms carry both types of risk,only the firm-specific risk will be diversified when we combine many firms' stocks into a portfolio.
• D)The risk premium for a stock is affected by its idiosyncratic risk.

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Definitions:

Reformation

The legal process of modifying a contract or document to accurately reflect the true intentions of the parties involved.

Quasi Contract

An obligation imposed by law to prevent unjust enrichment, even though no actual contract exists between the parties involved.

Specific Performance

A legal remedy requiring a party to perform a specific act, often the fulfillment of contractual obligations, as opposed to paying damages.

Gross Negligence

An extreme lack of care that demonstrates a willful or reckless disregard for the safety or lives of others, significantly beyond ordinary negligence.