Which of the Following Is Correct Regarding the Total Risk

question 113

Multiple Choice

Which of the following is correct regarding the total risk of a stock?

• A)The total risk of a stock is the stock's market and duration risks.
• B)The total risk of a stock is the stock's variance in price and its dividend yield.
• C)The total risk of a stock is the stock's market and diversifiable risks.
• D)The total risk of a stock is the stock's market and systematic risks.

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Definitions:

Expected Return

The anticipated average return on an investment, taking into account all potential outcomes and their probabilities.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Return Percentage

The amount of gain or loss on an investment over a specified period, presented as a percentage of the investment's initial cost.

Market Risk Premium

The additional return expected by investors for taking on the risk of investing in the stock market over a risk-free rate.