A Financial Institution

question 45

Multiple Choice

A financial institution:

• A) is a kind of financial intermediary.
• B) simply pools and invests savings.
• C) raises financing by selling shares or policies.
• D) invests primarily in commodities.

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Definitions:

Beta

A measurement of a stock's volatility in relation to the overall market, indicating its risk compared to the market average.

Total Risk

The complete set of risks associated with an investment, including both systematic and unsystematic risks.

Systematic Risk

Refers to the risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Unsystematic Risk

The danger linked to a particular corporation or sector that can be minimized by spreading investments.