If a Stock's Returns Are Volatile, Then the Stock

question 53

Multiple Choice

If a stock's returns are volatile, then the stock:

• A)Cannot be considered a negative risk asset
• B)Can still be considered a negative risk asset
• C)Has macro risk, but no unique risk
• D)Does not offer diversification potential

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Definitions:

FIFO

An accounting method for inventory valuation where the first items acquired are the first ones sold, standing for First In, First Out.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency in managing stock levels.

Days' Sales

A metric that estimates the average length of time it takes for a company to convert its accounts receivable into cash.

Annual Reports

Comprehensive reports on a company's activities throughout the preceding year, intended to give shareholders and other interested parties information about the company's performance and financial standing.