Which of the Following Statements Is CORRECT

question 107

Multiple Choice

Which of the following statements is CORRECT?

• A) When diversifiable risk has been diversified away,the inherent risk that remains is market risk,which is constant for all stocks in the market.
• B) Portfolio diversification reduces the variability of returns on an individual stock.
• C) Risk refers to the chance that some unfavorable event will occur,and a probability distribution is completely described by a listing of the likelihoods of unfavorable events.
• D) The SML relates a stock's required return to its market risk.The slope and intercept of this line cannot be controlled by the firms' managers,but managers can influence their firms' positions on the line by such actions as changing the firm's capital structure or the type of assets it employs.
• E) A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.

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Definitions:

Transverse Tubules

These are extensions of the cell membrane that penetrate into the center of skeletal and cardiac muscle cells, facilitating the uniform contraction of the muscle.

Sarcolemma

The thin, plasma membrane that envelopes a muscle cell (fiber), playing a critical role in muscle contraction.

Z Lines

Positions within muscle fibers that mark the boundaries of sarcomeres, playing a critical role in muscle contraction by anchoring actin filaments.

I Bands

The light-appearing regions of a sarcomere in striated muscle fibers, primarily composed of thin actin filaments.