Select the Correct Statement Regarding the Market Portfolio

question 67

Multiple Choice

Select the correct statement regarding the market portfolio.

• A) It is readily and precisely observable.
• B) It has no unsystematic risk.
• C) It has no systematic risk.
• D) It should be composed of stocks or bonds.

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Definitions:

Financial Risk

The risk of experiencing financial loss from an investment or business endeavor.

Insurable Risk

A risk that meets the criteria of an insurance policy, meaning it is possible to calculate both the probability and the potential cost of the risk.

Uninsurable Risk

A risk that is not acceptable for insurance coverage due to its high likelihood of loss.

Interest Rate

Interest Rate is the percentage charged on the total amount borrowed or earned, serving as the cost of borrowing or the reward for saving.