Which of the Following Statements Is Correct

question 43

Multiple Choice

Which of the following statements is correct?

• A) If a firm's stockholders are well diversified, we know from theory and from studies of market behavior that corporate risk is not important.
• B) Undiversified stockholders, 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 stock prices.
• D) Market risk is important but does not have a direct effect on stock price because it only affects beta.
• E) Market risk does not play any role in determining the rate of return on an investment.

---

Definitions:

Endemic Species

A species found only in the region where it evolved.

Habitat Destruction

The process by which a natural habitat becomes incapable of supporting its native species, leading to a loss of biodiversity.

Plastic Trash

Waste material consisting of discarded items made of plastic, often found polluting environments such as oceans, rivers, and landscapes.

Durable Items

Goods or products designed to last for a long period without frequent replacement, typically including appliances, cars, and furniture.