The Systematic Risk Principle Implies That the _____ an Asset

question 113

Multiple Choice

The systematic risk principle implies that the _____ an asset depends only on that asset's systematic risk.

• A) variance of the returns on
• B) standard deviation of the returns on
• C) expected return on
• D) total risk assumed by owning
• E) diversification benefits of

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Definitions:

Key Components

Essential parts or elements that make up a larger system or process.

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets.

Company's Liquidity

The ability of a company to meet its short-term financial obligations by quickly converting assets into cash without significant loss.

Gross Margin Ratio

A financial metric that measures a company's financial health by dividing its gross profit by net sales, indicating the percentage of sales revenue remaining after deducting the cost of goods sold.