Investment Risk Can Best Be Described as The

question 100

Multiple Choice

Investment risk can best be described as the:

• A)Dispersion of possible returns
• B)Elimination of macro risk through diversification
• C)Possibility of changes in the cost of capital
• D)Level of systematic risk for an undiversified investor

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Definitions:

Bankruptcy

A judicial procedure that allows people or entities that cannot fulfil their financial commitments to obtain exemption from part or all of their owed sums.

Legal Proceeding

A sequence of actions conducted formally in a court of law for the resolution of disputes or the enforcement of laws.

Optimal Capital Structure

The best mix of debt, equity, and other financing sources that minimizes the firm's cost of capital while maximizing its value.

Marketed Claims

Financial claims such as securities that are traded in public markets.