Why Would a Stock Market Investor Not Be Concerned with Unique

question 58

Multiple Choice

Why would a stock market investor not be concerned with unique risks when calculating expected rates of return?

• A)there is no method to quantify unique risks.
• B)unique risks are assumed to be diversified away.
• C)unique risks are compensated by the risk-free rate.
• D)Beta includes a component to compensate unique risk.

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Definitions:

Past Experiences

All events, learning, and personal development that have occurred in an individual's life before the present time.

Biology

The scientific study of life and living organisms, including their structure, function, growth, evolution, and distribution.

Future Expectations

Predictions or anticipations about what will happen or how situations will unfold in the future.

Coping Technique

A method or strategy used by an individual to deal with stressful situations, emotions, or challenges.