Which of the Following Statements Is True

question 51

Multiple Choice

Which of the following statements is true?

• A) In a well-diversified portfolio, unsystematic risk can be largely diversified away, leaving behind systematic.
• B) In a well-diversified portfolio, systematic risk can be largely diversified away, leaving behind unsystematic.
• C) In a well-diversified portfolio, both systematic and unsystematic risk can be largely diversified away.
• D) No matter how well diversified a portfolio is, unsystematic and systematic are always existent.

---

Definitions:

Effective Price

The final price after considering factors such as discounts, subsidies, or taxes, effectively what is paid or received.

Consumer Surplus

The disjunction between the price consumers are prepared to shell out for a good or service and what they end up shelling out.

Deadweight Loss

An economic efficiency decrement occurs when there's a failure to achieve or inability to achieve an equilibrium for a particular good or service.

Market Distortion

An economic phenomenon where external factors lead to a deviation from the expected or efficient allocation of resources, often causing prices to be higher or lower than they would be in a free market.