Which of the Following Statements Is False

question 61

Multiple Choice

Which of the following statements is false?

• A) Fluctuations of a stock's returns that are due to firm-specific news are common risks.
• B) The volatility in a large portfolio will decline until only the systematic risk remains.
• C) When we combine many stocks in a large portfolio, the firm-specific risks for each stock will average out and be diversified.
• D) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk.

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Definitions:

JCPenney Company

An American department store chain offering clothing, cosmetics, electronics, and more, known for its mid-range prices and promotions.

Reinforcement Deprivation

A condition in which an individual lacks rewards or positive feedback, which can impact motivation and performance.

Reinforcer

In behavioral psychology, an event or stimulus that increases the likelihood of a behavior being repeated.

Behavior

The actions or reactions of a person or animal in response to external or internal stimuli.