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:

Spider Monkeys

A type of New World monkey known for its long limbs and tail, which it uses for brachiation through the forest canopy.

Common Ancestor

The most recent individual from which all organisms in a group directly descend.

Inhabited

Occupied by residents, referring to a place where living organisms, including humans, live and grow.

Monkeys

Members of the primate order, characterized by a tail (unlike apes), higher brain functions, and a wide range of behaviors and habitats.