Macro Events Only Are Reflected in the Performance of the Market

question 3

Multiple Choice

Macro events only are reflected in the performance of the market portfolio because:

• A) the market portfolio has no individual firms.
• B) only macro events are tracked by economists.
• C) unique risks have been diversified away.
• D) firm-specific events would be too numerous to list.

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Definitions:

Probability Distribution

A function in mathematics that offers the chances of various outcomes happening in an experiment.

Average Profit

The mean amount of profit earned, calculated by dividing the total profit by the number of units sold or the period over which the profit was earned.

Weight Gain

An increase in body weight, which can be due to muscle mass increase, fat accumulation, or other factors.

Probability Distribution

A mathematical description of the likelihood of different outcomes in an experiment, showing how probabilities are distributed over a range of values.