Which of the Following Statements Is Most Correct

question 31

Multiple Choice

Which of the following statements is most correct?

• A)Business-specific risk cannot be eliminated by diversification.
• B)Investors are not compensated for bearing business specific risk.
• C)Risk that cannot be diversified away is the risk peculiar to the stock under consideration.
• D)You cannot ignore the business-specific risk even if you hold a very large portfolio.
• E)All of the above statements are correct.

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Definitions:

Roth Retirement Plan

A type of retirement savings account allowing taxed contributions to grow tax-free, with withdrawals in retirement also being tax-free.

Regular Retirement Plan

A retirement savings plan that allows individuals to save and invest for retirement, typically with tax advantages or benefits.

Tax Rate

The percentage at which income or financial transactions are taxed by the government.

Total Savings

The sum of all savings held by an individual or institution, often including bank accounts, investments, and other forms of financial reserves.