If an Investor Buys Enough Stocks, He or She Can

question 57

True/False

If an investor buys enough stocks, he or she can, through diversification, eliminate all of the market risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all diversifiable risk.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor expenses.

Cash Basis

A financial recording approach that logs income and expenditures at the time of actual receipt or payment, rather than when they are earned or owed.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not considered cash equivalents.

Financing Activities

Transactions that involve raising capital or repaying investors, such as issuing shares or taking out loans.