Which of the Following Statements Is FALSE

question 9

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.

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Definitions:

Sociobiology

An interdisciplinary field that emphasizes evolutionary explanations of social behavior in animals, including human beings.

Evolutionary Explanations

Theories that account for the development of traits and behaviors through the process of natural selection.

Social Behavior

Behavior among two or more organisms, typically from the same species, that encompasses cooperation, competition, aggression, and communication.

Linkage Studies

Genetic research aimed at discovering the approximate location of genes on chromosomes through the study of affected families.