Which Statement Is FALSE Regarding Risk and Return

question 41

Multiple Choice

Which statement is FALSE regarding risk and return?

• A) For broad asset classes,the relationship between risk and return is nearly linear.
• B) Adding multiple stocks to a portfolio can reduce non-systematic risk.
• C) There is a nearly linear relationship between risk and return for individual stocks.
• D) Because investors can easily eliminate risk through diversification,investors should only be rewarded for non-diversifiable risk.

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Definitions:

Retirement Account

A financial account that is specifically designed to save funds for retirement, offering tax benefits for money invested and saved.

Pension Plan

A type of retirement plan where an employer makes contributions to a pool of funds set aside for an employee's future benefit.

Multiplier

A factor by which an economic variable is multiplied to estimate its impact on other variables.

Salaries

Regular payments made by an employer to an employee, typically paid monthly or biweekly for professional or office work.