Which of the Following Risks Is Most Important to a Well-Diversified

question 65

Multiple Choice

Which of the following risks is most important to a well-diversified investor in common stocks?

• A)Market risk
• B)Unique risk
• C)Total risk
• D)Diversifiable risk

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Definitions:

Prospectus

An official document that a company issues to potential investors detail the offering of securities for sale, providing financial data, and disclosing risks.

Securities Act of 1933

A U.S. federal law enacted to ensure transparency and fairness in the securities market, requiring that investors receive significant information regarding securities being offered for public sale.

Due Diligence Defense

A legal defense whereby the defendant can avoid liability by proving that they took all possible steps to avoid committing an offence.

Registration Statement

A formal document filed with regulatory authorities that provides details about an investment offering for sale to the public, often associated with securities.