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:

Triarchic Theory

A theory of intelligence proposed by Robert Sternberg, suggesting that human intelligence comprises three aspects: analytical, creative, and practical.

Intellectual Functioning

A measure of a person's overall mental ability or intelligence.

Information Processing

The process of taking in information, storing it, and then using it, akin to the way a computer processes data.

Fluid Intelligence

The ability to think abstractly, reason quickly, and solve problems in novel situations, independently of acquired knowledge.