Which of the Following Is the Best Definition of Principle

question 295

Multiple Choice

Which of the following is the best definition of principle of diversification?

• A) A theory showing that the expected return on any risky asset is a linear combination of various factors.
• B) A risk that affects at most a small number of assets. Also called unique or asset-specific risks.
• C) A risk that influences a large number of assets. Also called market risk.
• D) Positively sloped straight line displaying the relationship between expected return and beta.
• E) Principle stating that spreading an investment across a number of assets eliminates some, but not all, of the risk.

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Definitions:

Social Advantage

The benefits or favorable positions in society, often arising from the social standing, connections, or cultural knowledge one possesses.

Self-assured

Having confidence in one's own abilities or character; self-confident.

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A period of uncertainty and confusion in which a person's sense of identity becomes unsure; often seen in adolescence.

Puberty

The phase of human development during which a child's body matures into an adult body capable of sexual reproduction.