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:

Risky Projects

Projects that carry a higher degree of uncertainty and potential for loss, often requiring comprehensive risk assessment and management strategies.

Private Placements

The act of presenting financial instruments to a limited group of chosen investors to gather funds.

Flotation Costs

Flotation costs refer to the expenses incurred by a company in issuing new securities, including fees for underwriting, legal counsel, and registration.

Public Offerings

The act of selling stocks or bonds to the public for the first time.