One of the Easiest Methods of Diversifying Away Firm-Specific Risks

question 28

Multiple Choice

One of the easiest methods of diversifying away firm-specific risks is to:

• A) buy only stocks with a beta of 1.0.
• B) build a portfolio with 40 to 55 individual stocks.
• C) purchase the shares of a mutual fund.
• D)purchase stocks that plot above the security market line.

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Definitions:

Cuban Independence

The struggle for liberation from Spanish rule, culminating in the Spanish-American War of 1898, leading to Cuba's independence.

Reciprocal Tariff

A trade policy agreement between two countries to reduce tariffs and barriers to trade on imports and exports between them.

Cuba And Brazil

Two countries in Latin America, notable for their unique cultural and historical backgrounds, where Cuba is in the Caribbean and Brazil is the largest country in South America.

US Annexation

The process by which the United States incorporated and claimed sovereignty over new territories, often after conquest or negotiation.