Electronic Communications Networks Are Primarily Intended to Prevent Executives from Using

question 7

True/False

Electronic communications networks are primarily intended to prevent executives from using inside information when trading stocks.

---

Definitions:

Systematic Risk

Market or sector-wide risk, commonly called market risk, that remains despite attempts at diversification.

Unsystematic Risk

The risk associated with a specific company or industry, which can be reduced through diversification, unlike systematic risk which affects the entire market.

Portfolio Diversification

A strategy for managing risk that involves diversifying a portfolio with a broad range of investments to reduce the effect of the performance of any individual asset.

Security

A financial instrument that represents ownership (stocks), a creditor relationship (bonds), or rights to ownership (options) that can be bought and sold.