Which of the Following Statements Is FALSE

question 84

Multiple Choice

Which of the following statements is FALSE?

• A) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk.
• B) When we combine many stocks in a large portfolio, the firm-specific risks for each stock will average out and be diversified.
• C) Fluctuations of a stock's return that are due to firm-specific news are common risks.
• D) The volatility in a large portfolio will decline until only the systematic risk remains.

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Definitions:

Digital Divide

The gap between individuals who have access to modern information and communication technology and those who lack access, affecting opportunities in education, healthcare, and employment.

Federal Government

The national government of a federated state, which holds the authority over the entire nation and is responsible for areas such as defense, foreign policy, and interstate commerce.

Enormous Institution

A large and significant organization or establishment, often influential in its field or society at large.

Government Action

Measures or interventions undertaken by a government to address issues, implement policies, or affect societal conditions.