Although Unique Risk Is Present in Differing Amounts, Individual Stocks

question 20

Multiple Choice

Although unique risk is present in differing amounts, individual stocks are:

• A)Exposed to the same amount of market risk
• B)Exposed to differing amounts of market risk also
• C)Not exposed to market risk; only the general economy is subject to market risk
• D)Able to diversify away their market risk

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Definitions:

Assumption

An accepted fact or statement taken for granted without proof.

Applying a Generalization

Applying a generalization involves using a broad statement or principle derived from specific instances to make predictions or judgments about other cases.

Classes of Objects

Categories or groups into which objects are classified based on shared characteristics or attributes.

Valid Argument

A logical argument where if the premises are true, the conclusion must also necessarily be true.