It Has Been Found That the Value of the Stock

question 1

Multiple Choice

It has been found that the value of the stock of corporations whose shares are traded publicly in anefficient marketplace is

• A) generally negatively affected by diversification, because of the increase in risk.
• B) generally not affected by diversification, unless greater returns are expected.
• C) generally positively affected by diversification, because of the reduction in risk.
• D) generally negatively affected by diversification, because of the increase in the required rate of return.

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Definitions:

Characteristic

A distinguishing quality, trait, or feature of a person, thing, or category.

Perceptual Defense

A psychological concept referring to an individual's tendency to unconsciously protect themselves from unpleasant or threatening information, ideas, or perceptions.

Folk Song

A folk song is a traditional or composed song typically associated with the cultural and social activities of a community or nation, often passed down orally.

Expectancy Effect

The phenomenon in which a person's expectations about a situation or outcome can influence their behavior and the situation's outcome itself.