Which of the Following Statements Is Incorrect

question 16

Multiple Choice

Which of the following statements is incorrect?

• A) The slope of the security market line is measured by beta.
• B) Two securities with the same stand-alone risk can have different betas.
• C) Company-specific risk can be diversified away.
• D) The market risk premium is affected by attitudes about risk.
• E) Higher beta stocks have a higher required return.

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Definitions:

Consolidated Income Statement

A financial document that summarizes the combined income and expenses of a parent company and its subsidiaries.

Sales

The revenue a company generates from selling goods or services.

Consolidated Balance Sheet

A financial statement presenting the total assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one entity.

Patents

Exclusive rights granted to an inventor to manufacture, use, or sell an invention for a certain number of years.