Perhaps the Best Way to Reduce Macro Risk in a Stock

question 22

Multiple Choice

Perhaps the best way to reduce macro risk in a stock portfolio is to invest in stocks that:

• A)Have only unique risks
• B)Have diversified away the macro risk
• C)Have low exposure to business cycles
• D)Pay guaranteed dividends

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Definitions:

Investments

Assets purchased with the expectation that they will generate income or will appreciate in the future.

Net Income

The total revenue of a company minus the total expenses, indicating the profit earned over a specific period.

Organizational Expenses

Costs incurred during the formation of a corporation, partnership, or any business entity, such as legal and administrative fees.

Intangible Assets

Non-physical assets such as patents, trademarks, and goodwill that have value to a business.