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:

Mnemonic

A technique or strategy designed to assist in memorizing information by making it easier to recall, such as through acronyms or rhymes.

Functional

Capable of operating or serving a purpose effectively.

Phonemic

Relating to the units of sound in a language that distinguish one word from another, for example, the difference between the sounds /p/ and /b/ in "pad" and "bad."

Structural

Pertaining to the arrangement and relations between parts or elements of something complex.