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:

Division's

Relates to a section or branch of a company that operates semi-independently and focuses on a particular product line, market segment, or geographical area.

ROI

Return on Investment, a metric used to evaluate the efficiency of an investment or compare the efficiency of several investments.

Investment Opportunity

A situation or venture that has the potential to generate a return on investment.

Average Operating Assets

The mean worth of resources employed in the functioning of a company throughout a given timeframe.