Systematic Risk Is Important Because

question 52

Multiple Choice

Systematic risk is important because:

• A) the expected return of an asset depends on its systematic risk.
• B) systematic risk is essentially eliminated in a portfolio.
• C) measuring systematic risk allows us to price stocks.
• D) systematic risk allows for risk to be diversified away.
• E) systematic risk is linearly related to the standard deviation of an asset.

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Definitions:

Quebec Pension Plans

A mandatory public pension plan for workers in Quebec, aimed at providing retirees with a basic level of income.

Employee Contributions

The portion of earnings that workers voluntarily allocate towards benefits like retirement plans or health insurance.

Universal Portability

A concept often related to social security or benefits systems, allowing individuals to retain their benefits or rights across different jobs, regions, or countries.