If You Build a Large Enough Portfolio, You Can Diversify

question 78

Multiple Choice

If you build a large enough portfolio, you can diversify away all ________ risk, but you will be left with ________ risk.

• A)diversifiable, diversifiable
• B)diversifiable, unsystematic
• C)unsystematic, systematic
• D)systematic, undiversifiable

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Definitions:

Negotiated Power

A dynamic where power or influence is distributed through discussion, compromise, or agreement between parties.

Referent Power

Power that comes from our attraction to another person, or the charisma a person possesses.

Expert Power

Power based on a person’s knowledge and experience.

Reward Power

Power based on a person’s ability to satisfy our needs.