Which of the Following Statements Is CORRECT

question 107

Multiple Choice

Which of the following statements is CORRECT?

• A) When diversifiable risk has been diversified away,the inherent risk that remains is market risk,which is constant for all stocks in the market.
• B) Portfolio diversification reduces the variability of returns on an individual stock.
• C) Risk refers to the chance that some unfavorable event will occur,and a probability distribution is completely described by a listing of the likelihoods of unfavorable events.
• D) The SML relates a stock's required return to its market risk.The slope and intercept of this line cannot be controlled by the firms' managers,but managers can influence their firms' positions on the line by such actions as changing the firm's capital structure or the type of assets it employs.
• E) A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.

---

Definitions:

Materials Requisitioned

The act of asking for and taking out items from stock for the purpose of manufacturing or utilization.

Raw Materials Issued

The total raw materials moved from inventory for use in production.

Labor Time Tickets

Documents used to track the amount of time an employee spends on different tasks, facilitating accurate labor cost allocation.

Supervision

The act of overseeing work performance and activities to ensure that goals are met and policies are followed.