Which of the Following Statements About Market Risk and Firm-Specific

question 65

Multiple Choice

Which of the following statements about market risk and firm-specific risk is true?

• A)Market risk is an unsystematic risk, whereas firm-specific risk is systematic risk.
• B)Investors are not rewarded for taking market risk, whereas they are rewarded for taking firm-specific risk.
• C)Market risk is a diversifiable risk, whereas firm-specific risk is a nondiversifiable risk.
• D)Market risk is the relevant risk, whereas firm-specific risk is an irrelevant risk.
• E)Market risk includes a firm's default risk, whereas firm-specific risk includes economic risk.

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Definitions:

Debits And Credits

The two sides of every financial transaction in double-entry bookkeeping, with debits usually recorded on the left and credits on the right, used to ensure the accounting equation remains in balance.

Chart Of Accounts

A list of the accounts in the ledger.

Balance Sheet

An accounting summary that captures a firm's financial status at a particular instant, outlining the company's resources, obligations, and equity held by shareholders.

Ledger

A book or collection of financial accounts where financial transactions are recorded.