One of the Easiest Methods of Diversifying Away Firm-Specific Risks

question 81

Multiple Choice

One of the easiest methods of diversifying away firm-specific risks is to:

• A) buy only stocks with a beta of 1.0.
• B) build a portfolio with 40 to 55 individual stocks.
• C) purchase the shares of an index fund.
• D) purchase stocks that plot above the security market line.

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Definitions:

Politics

The activities associated with the governance of a country or other area, especially the debate or conflict among individuals or parties having or hoping to achieve power.

The Rocks

A basic geological term referring to the solid mineral material forming part of the surface of the earth and other similar planets, exposed on the surface or underlying the soil or oceans.

Rules and Regulations

Formal directives and policies established to guide behavior and ensure orderly conduct within an organization.

Political Behavior

Activities or actions taken within an organization to acquire, develop, and use power and other resources to obtain one's preferred outcomes.