Which of the Following Statements Is FALSE

question 84

Multiple Choice

Which of the following statements is FALSE?

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

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Definitions:

Biological Clock

An internal mechanism that regulates bodily rhythms and cycles, such as the sleep-wake cycle, on a roughly 24-hour schedule.

Hypothalamus

A region of the brain that plays a crucial role in many essential functions, including hormone release, regulation of body temperature, and control of hunger and thirst.

Premenstrual Syndrome (PMS)

A condition that affects a woman's emotions, physical health, and behavior during certain days of the menstrual cycle, generally just before her menses.

Menstrual Cycle

The monthly series of changes a woman's body goes through in preparation for the possibility of pregnancy.