Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A)In a well-diversified portfolio, unsystematic risk can be largely diversified away, leaving behind systematic risk.
• B)In a well-diversified portfolio, systematic risk can be largely diversified away, leaving behind unsystematic risk.
• C)In a well-diversified portfolio, both systematic and unsystematic risk can be largely diversified away.
• D)No matter how well diversified a portfolio is, unsystematic and systematic risk always exist.

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Definitions:

Disposable Income

The fiscal resources available to households for allocation towards saving and spending post income tax adjustments.

Autonomous Consumption

The portion of consumption spending that does not change with changes in income level, reflecting basic consumption needs.

Disposable Income

Disposable income is the amount of money that households or individuals have available for spending and saving after income taxes are accounted for.

Consumption

The use of goods and services by households or individuals, forming part of the aggregate demand in an economy.