Which of the Following Statements Is Most Correct

question 29

Multiple Choice

Which of the following statements is most correct?

• A) It is possible to have a situation where the market risk of a single stock is less than the market risk of a portfolio of stocks.
• B) The market risk premium will increase if, on average, market participants become more risk averse.
• C) If you selected a group of stocks whose returns are perfectly positively correlated, then you could end up with a portfolio for which none of the unsystematic risk is diversified away.
• D) Statements a and b are correct.
• E) All of the statements above are correct.

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Definitions:

Environmental Conditions

The external factors including climate, terrain, and biological factors that influence ecosystems and human activities.

Growth Strategy

A plan of action that outlines how a business intends to expand its operations and customer base, leading to increased revenue.

Merge

The action or process of combining two or more entities into one, often in the context of organizational or business consolidations.

Corporate Strategy

The overall plan which outlines the goals of a corporation and the methods to achieve those goals.