Stocks Have Both Diversifiable Risk and Undiversifiable Risk, but Only

question 2

True/False

Stocks have both diversifiable risk and undiversifiable risk, but only diversifiable risk is rewarded with higher expected returns.

---

Definitions:

Decomposer

Organisms, primarily bacteria and fungi, that break down dead organic material, contributing to nutrient recycling in ecosystems.

Caterpillar

The larval stage of butterflies and moths, which is typically a voracious feeder on leaves before undergoing metamorphosis.

Secondary Consumer

An animal that eats herbivores (primary consumers).

Primary Consumer

Herbivores that feed on primary producers (plants and algae), playing a pivotal role in the transfer of energy through the food chain.