Because Investors Can Eliminate Unsystematic Risk "For Free" by Diversifying

question 94

Multiple Choice

Because investors can eliminate unsystematic risk "for free" by diversifying their portfolios, they ________.

• A) do not require a risk premium for bearing it
• B) require a risk premium for bearing it
• C) are indifferent about credit spread and risk premium
• D) do not require a credit spread

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Definitions:

Backpay

Compensation awarded to employees for wages they were denied due to unlawful employment practices.

NLRA Coverage

Refers to the scope of businesses and workers protected under the National Labor Relations Act, which governs labor relations in the United States, including rights to organize and collective bargaining.

Opt Out Approach

A policy or system where individuals are assumed to be participants unless they choose to opt-out or decline participation.

Certification Election

A formal process through which employees vote to accept or reject representation by a labor union.