You Have the Following Data on Three Stocks

question 5

Multiple Choice

You have the following data on three stocks:
As a risk minimizer,you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.

• A) A; B.
• B) B; C.
• C) C; A.
• D) C; B.
• E) A; A.

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Definitions:

Direct Method

An approach in accounting that allocates service department costs directly to producing departments without considering service departments' interrelations.

Operating Activities

Transactions and other events related to the primary operations of a business, such as selling products or services.

Indirect Method

A technique used in cash flow statement preparation that starts with net income and adjusts for changes in balance sheet accounts to arrive at cash flow from operating activities.

Cash Flows

The total amount of money being transferred in and out of a business, especially as affecting liquidity.