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:

Bean Sprouts

The germinated beans used commonly in Asian cuisines, known for their crunchy texture and nutritional benefits.

Firm's Production

The total output of goods or services that a company produces, often within a specified time frame, reflecting its productive capacity.

Reaction Function

A formula or model that predicts how a firm will change its output in response to changes in prices, outputs, or strategies of other firms.

Demand Function

A mathematical expression that shows the relationship between the quantity demanded of a good and its determining factors, such as price and income.