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:

Religious Differences

Variations in beliefs, practices, and doctrines among different religious groups, often a source of conflict or diversity within societies.

Spanish Armada

The fleet dispatched by Spain in 1588 as part of a planned invasion of England, which ended in defeat, marking a pivotal moment in Anglo-Spanish relations.

Roman Catholic Church

The largest Christian church, led by the Pope in Vatican City, with a global presence and centuries-long influence on religious, cultural, and political affairs.

Permanent English Settlement

Jamestown, Virginia, established in 1607, recognized as the first enduring English settlement in what would become the United States.