An Increase in Nondiversifiable Risk

question 60

Multiple Choice

An increase in nondiversifiable risk

• A) would have no effect on the beta and would, therefore, cause no change in the required return.
• B) would cause an increase in the beta and would increase the required return.
• C) would cause an increase in the beta and would lower the required return.
• D) would cause a decrease in the beta and would, therefore, lower the required rate of return.

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Definitions:

Anxiety Disorders

A group of mental health disorders characterized by significant feelings of anxiety and fear, impacting daily functioning.

Delusions

False beliefs that are maintained even though they clearly are out of touch with reality.

Hallucinations

Sensory perceptions that occur in the absence of a real external stimulus or that represent gross distortions of perceptual input.

Repression

Keeping distressing thoughts and feelings buried in the unconscious.