Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A) When we combine many shares in a large portfolio, the firm-specific risks for each share will average out and be diversified.
• B) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk.
• C) The volatility in a large portfolio will decline until only the systematic risk remains.
• D) Fluctuations of a share's returns that are due to firm-specific news are common risks.

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Definitions:

Integrating Information

The process of combining data from different sources to produce a comprehensive understanding or solution.

Shared Meaning

A common understanding or interpretation of information, messages, or symbols among members of a group or community.

Direct Reports' Insights

Valuable information or understanding gained from individuals who report directly to a supervisor or manager.

Global CEO

Is a Chief Executive Officer who oversees, manages, and directs business operations on a global scale.