The Standard Deviations of Individual Stocks Are Generally Higher Than

question 112

Multiple Choice

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because individual stocks:

• A)Offer higher returns
• B)Have more systematic risk
• C)Have no diversification of risk
• D)Do not have unique risk

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Definitions:

Break-Even

The juncture where overall expenses match the total income, leading to neither a profit nor a loss.

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in monetary value.

Net Operating Income

The profit generated from a company's operational activities, calculated as revenues minus the cost of goods sold and all operational expenses, excluding interest and taxes.

Common Fixed Expenses

Costs that remain constant regardless of the volume of goods produced or sold, including items like lease payments, wages, and coverage fees.