Identify the Types of Firm-Specific Factors That Increase a Firm's

question 17

Essay

Identify the types of firm-specific factors that increase a firm's nondiversifiable risk (systematic risk).Identify the types of firm-specific factors that increase a firm's diversifiable
risk (idiosyncratic risk or nonsystematic risk).Why do models of risk-adjusted expected
returns include no expected return premia for diversifiable risk?

---

Definitions:

Just-World Phenomenon

The cognitive bias to believe that the world is fair and people get what they deserve.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic or decision.

Explicit Bias

Prejudice or favoritism toward a group or individual that is consciously identified and directly expressed by an individual.

Just-World Phenomenon

The cognitive bias to believe that the world is inherently fair, causing people to rationalize an unfortunate situation as deserved by the victim.