Systematic Risk Is Rewarded with Higher Returns in the Market

question 43

Multiple Choice

Systematic risk is rewarded with higher returns in the market because:

• A) it is associated with market movements which cannot be eliminated through diversification
• B) it is a microeconomic risk
• C) that risk is unique to a firm or an industry
• D) initial capital outlays are higher to purchase the investment

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Definitions:

Statute of Frauds

A rule of law that mandates specific types of contracts must be documented and signed by the involved party to deter fraudulent activities and false testimonies.

Additional Obligations

Additional obligations mean extra duties or responsibilities that may be added to an agreement or contract beyond its originally stipulated terms.

UCC

A vast array of regulatory provisions for commercial transactions in the United States is constituted within the Uniform Commercial Code.

Incidental Beneficiaries

Third parties who might benefit from a contract incidentally but have no enforceable rights in that contract.