Which of the Following Statements Is Correct

question 31

Multiple Choice

Which of the following statements is correct?

• A) If a firm's stockholders are well diversified,we know from theory and from studies of market behavior that corporate risk is not important.
• B) Undiversified stockholders,including the owners of small businesses,are more concerned about corporate risk than market risk.
• C) Empirical studies of the determinants of required rates of return (r)have found that only market risk affects stock prices.
• D) Market risk is important but does not have a direct effect on stock price because it only affects beta.