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Explain the Concepts of Unique Risk and Market Risk,and How

question 32

Essay

Explain the concepts of unique risk and market risk,and how the total level of portfolio risk can change by adding additional securities.


Definitions:

Controllable Margin

The portion of profit or income that a manager has direct control over, often excluding fixed costs and expenses.

Profit Center

A part of an organization that is directly responsible for generating its own revenue and profit.

Responsibility Report

A managerial accounting tool that collects financial information to assess the performance of various segments of a business.

Noncontrollable Fixed Costs

Fixed costs that cannot be easily changed or controlled by management in the short term, like property taxes or lease payments.

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