Perhaps the Best Way to Reduce Macro Risk in a Stock

question 33

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:

Selling Price

The price for which a product or service is sold to the customer.

CVP Income Statement

An income statement format used in cost-volume-profit analysis to determine how changes in costs and volume affect a company's profit.

Variable Costs

Costs that vary directly with the level of production or sales volume, including materials and labor costs.

CVP Analysis

A management accounting technique used to determine the effect of varying levels of cost and volume on operational profit.