The Amount of Risk That Will Remain Depends on the Degree

question 72

Multiple Choice

The amount of risk that will remain depends on the degree to which the stocks are exposed to

• A) independent risks.
• B) diversifiable risks.
• C) common risks.
• D) idiosyncratic risks.

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Definitions:

Fair Value Method

An accounting approach to measure and report assets and liabilities at estimates of their current fair market prices.

Unrealized Holding Gain

The increase in the value of an asset that has not yet been sold and, therefore, not reflected in the earnings.

Available-For-Sale Securities

Financial assets not classified as held-to-maturity or trading securities, and thus can be sold in the short term for liquidity purposes.

Fair Value

The estimated price at which an asset or liability could be traded in a fair transaction between willing parties.