Which of the Following Statements Is Correct

question 69

Multiple Choice

Which of the following statements is correct?

• A) If a firm's shareholders are well diversified, we know from theory and from studies of market behavior that corporate risk is not important.
• B) Undiversified shareholders, including the owners of small businesses, are more concerned about corporate risk than market risk.
• C) Empirical studies of the determinants of required rates of return (k) have found that only market risk affects share prices.
• D) Market risk is important but does not have a direct effect on share price because it only affects beta.

---

Definitions:

Second-Stage Labor

The phase of labor during childbirth when the woman actively pushes to help the baby move down the birth canal.

Placenta

An organ that develops in the uterus during pregnancy, providing oxygen and nutrients to and removing waste from the developing fetus through the umbilical cord.

Birth Canal

The passageway through which an infant is born; the vagina.

Miscarriage

The spontaneous loss of a pregnancy before the fetus is able to survive outside the womb, typically occurring before the 20th week of pregnancy.