Which of the Following Is a Correct Statement About Diversification

question 245

Multiple Choice

Which of the following is a correct statement about diversification?

• A) Most diversification benefits are realized with just 10 stocks.
• B) Diversification is the process of reducing the riskiness associated with individual assets by spreading an investment across numerous assets.
• C) Diversifiable risk is the only risk that matters to a rational investor.
• D) When a stock is combined into a portfolio, the standard deviation of that portfolio remains unchanged.
• E) There is no limit to the amount of risk that can be eliminated through diversification.

Recognize the role of cultural, administrative, geographic, and economic distances in international expansion.

Identify consumer biases towards local versus foreign products.

Understand the implications of different entry modes on a company's control over operations and brand.

Assess the risks and rewards associated with various foreign market entry strategies.

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Definitions:

Builder's Lien Acts

Laws that provide a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.

Statutory Holdback

A legal requirement to withhold a certain percentage of the contract price on a construction project to ensure all subcontractors are paid.

Lien Claimant

Describes a person or entity that has the right to keep possession of property belonging to another person until a debt owed by that person is discharged.

Loan Agreement

A legally binding contract between a borrower and a lender detailing the terms and conditions under which the loan is provided.