Which of the Following Statements Concerning Risk Are Correct

question 20

Multiple Choice

Which of the following statements concerning risk are correct?
I.Systematic risk is measured by beta.
II.The risk premium increases as unsystematic risk increases.
III.Systematic risk is the only part of total risk that should affect asset prices and returns.
IV.Diversifiable risks are market risks you cannot avoid.

• A) I and III only
• B) II and IV only
• C) I and II only
• D) III and IV only
• E) I, II, and III only
• F) None of the above.

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Definitions:

Price

The amount of money required to purchase a good or service, serving as a reflection of its value, market demand, and supply conditions.

Profit Per Unit

The profit made from each product sold, determined by deducting the unit cost from the unit selling price.

Industry Demand

The total demand for goods and services produced by a specific industry within a market.

Firm's Demand

The amount of a particular good or service that a firm wishes to purchase at various prices, reflecting the firm's input needs for production.