Which of the Following Statements Is Correct Regarding Total Risk

question 88

Multiple Choice

Which of the following statements is correct regarding total risk?

• A) The coefficient of variation is a measure of the firm's total risk.
• B) All firms have the same amount of total risk because they are all exposed to the same market risk.
• C) Conglomerates will have less total risk than a firm that has one line of business.
• D) None of the statements are correct.

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Definitions:

Corporation

A legal entity that is separate from its owners, with its own rights and responsibilities, allowing it to own property, sue or be sued, and enter contracts.

Board of Directors

A group of individuals elected to represent shareholders and oversee the management and major decisions of a corporation.

Sarbanes-Oxley Act

U.S. legislation enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.

Securities Commission

A government agency or body responsible for regulating the securities industry and protecting investors.