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:

Demote Button

A feature in hierarchical or structured applications, such as outlining or presentation software, allowing users to lower the rank or level of a selected item in a list or structure.

Outline View

A feature in word processing and presentation software that displays the document or presentation structure in an easy-to-navigate, collapsed, or expanded format.

Level 2 Heading

A secondary heading in a document hierarchy, typically styled to be visually subordinate to a top-level (Level 1) heading, used to organize and structure content.

Chart Axes

The lines bordering a chart that serve as a frame of reference for measuring and categorizing data points.