Investors Can Avoid Unsystematic Risk by

question 63

Multiple Choice

Investors can avoid unsystematic risk by

• A)using the capital asset pricing model.
• B)investing in stocks with low PE ratios.
• C)holding diversified portfolios.
• D)using the free cash flow model.

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Definitions:

EMV

Stands for EuroPay, MasterCard, and Visa, a standard for the interoperability of chip cards and chip-card capable payment terminals and ATMs, for authenticating credit and debit card transactions.

Maximin Criterion

A decision-making rule used for minimizing the worst-case scenario loss.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

EMV

stands for Expected Monetary Value, a concept in risk management used to calculate the average outcome of future events and their financial impacts.