Roger Determines That If Aim Corporation Has High Revenues, Then

question 88

Multiple Choice

Roger determines that if Aim Corporation has high revenues, then Zest Corporation will have low revenues, and that if Aim Corporation has low revenues, Zest Corporation will have high revenues. He buys stock in both corporations.

• A)He has reduced firm-specific risk but not market risk.
• B)He has reduced market risk, but not firm-specific risk.
• C)He had reduce both firm-specific risk and market risk.
• D)He has reduced neither firm-specific risk nor market risk.

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Definitions:

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and prices of goods.

Price

The cost associated with purchasing a particular product or service.

Budget Constraint

The limitations on the consumption bundle that a consumer can afford given their income and the prices of goods and services.

Household's Income

The total annual income received by all members of a household, including wages, salaries, benefits, and other sources of income.