Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A) Well diversified stockholders do not consider corporate risk when determining required rates of return.
• B) Undiversified stockholders, including the owners of small businesses, are more concerned about corporate risk than market risk.
• C) Managers care only about market risk.
• D) Market risk is important but does not have a direct effect on stock price because it only affects beta.
• E) All of the statements above are false.

Identify biases and errors in performance appraisals and how they affect employee assessment.

Comprehend the benefits and challenges of different job design strategies like job rotation, job enlargement, and job enrichment.

Understand the significance and mechanisms of job characteristics and how they influence motivation.

Recognize the changing trends in work arrangements, such as telecommuting, job sharing, and flexible working hours.

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Definitions:

Risk Premium

The additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.

Risky Asset

An investment that holds a significant chance of losing all or part of its value.

Risk-free Asset

An investment option that ensures a definite return and carries no risk of losing money.

Portfolio Weights

The percentages of the total investment that are held in various components of a portfolio.