Diversification Can Reduce Firm-Specific Risk

question 42

True/False

Diversification can reduce firm-specific risk.

---

Definitions:

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Net Cash Flow

The amount of cash generated or lost over a specific period, considering cash inflows and outflows.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decline in its value due to wear and tear.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in net profit or loss.