Which of the Following Is the Best Definition of Principle

question 21

Multiple Choice

Which of the following is the best definition of principle of diversification?

• A) A theory showing that the expected return on any risky asset is a linear combination of various factors.
• B) A risk that affects at most a small number of assets. Also called unique or asset-specific risks.
• C) A risk that influences a large number of assets. Also called market risk.
• D) Positively sloped straight line displaying the relationship between expected return and beta.
• E) Principle stating that spreading an investment across a number of assets eliminates some, but not all, of the risk.

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Definitions:

Ideal Body Weight

An estimation of an optimal weight based on height, aiming for a healthful balance to minimize risk of diseases.

Vitamin C Deficiency

A nutritional deficiency that can lead to symptoms such as scurvy, characterized by weakened immunity and connective tissue, and issues with skin and gum health.

Swollen Gums

Inflammation and swelling of the gum tissue, often a sign of gum disease or infection.

Gastrointestinal Motility

The process by which the muscles of the gastrointestinal tract move contents through the digestive system.