Why Would a Stock Market Investor Not Be Concerned with Unique

question 58

Multiple Choice

Why would a stock market investor not be concerned with unique risks when calculating expected rates of return?

• A)there is no method to quantify unique risks.
• B)unique risks are assumed to be diversified away.
• C)unique risks are compensated by the risk-free rate.
• D)Beta includes a component to compensate unique risk.

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Definitions:

Organisational Design

Organisational design is the process of shaping an organization's structure and roles to align with its objectives, strategy, and environment, enhancing efficiency and effectiveness.

Strategy

Strategy refers to a plan of action designed to achieve a long-term or overall aim.

Chain of Command

The formal line of authority within an organization, showing how orders flow from top management down to lower levels of employees.

Competitive Advantage

A distinct characteristic or group of characteristics giving an organization the advantage over its competition.