Which of the Following Statements Is False

question 82

Multiple Choice

Which of the following statements is false?

• A) Because investors are risk averse, they will demand a risk premium to hold unsystematic risk.
• B) Over any given period, the risk of holding a stock is that the dividends plus the final stock price will be higher or lower than expected, which makes the realized return risky.
• C) The risk premium for diversifiable risk is zero, so investors are not compensated for holding firm-specific risk.
• D) Because investors can eliminate firm-specific risk "for free" by diversifying their portfolios, they will not require a reward or risk premium for holding it.

---

Definitions:

Genetics

The scientific study of heredity and the variation of inherited characteristics.

Cerebral Cortex

The outer layer of the brain, involved in complex functions such as thought, perception, and memory.

Hypothalamus

A region of the brain responsible for the regulation of certain metabolic processes and other activities of the autonomic nervous system, including temperature, hunger, and thirst regulation.

Thalamus

A vital brain structure acting as the main relay station between the cerebral cortex and the rest of the nervous system.