Which of the Following Statements Is CORRECTσ

question 66

Multiple Choice

Which of the following statements is CORRECTσ

• A) if an investor buys enough stocks, he or she can, through diversification, eliminate all of the diversifiable risk inherent in owning stocks. therefore, if a portfolio contained all publicly traded stocks, it would be essentially riskless.
• B) the required return on a firm's common stock is, in theory, determined solely by its market risk. if the market risk is known, and if that risk is expected to remain constant, then no other information is required to specify the firm's required return.
• C) portfolio diversification reduces the variability of returns (as measured by the standard deviation) of each individual stock held in a portfolio.
• D) a security's beta measures its non-diversifiable, or market, risk relative to that of an average stock.
• E) a stock's beta is less relevant as a measure of risk to an investor with a well-diversified portfolio than to an investor who holds only that one stock.

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Definitions:

Loudness

A perceptual measure of the strength or intensity of a sound, usually measured in decibels, experienced by the listener.

Subtractive Colour Mixing

A process by which colors are produced, typically involving the mixing of colored pigments, where wavelengths are absorbed (subtracted), and the resulting color is a combination of the remaining wavelengths reflected.

Superimposing Lights

The process of placing or layering multiple sources of light over each other, often to achieve increased illumination or specific lighting effects.

Whiteness

A social construct referring to the set of cultural, historical, and social advantages and privileges that come with being identified as white.