Use the Information for the Question(s)below

question 63

Multiple Choice

Use the information for the question(s) below.
Big Cure and Little Cure are both pharmaceutical companies.Big Cure presently has a potential "blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval.If approved,Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure.Little Cure has 10 separate less important drugs before the FDA waiting for approval.If approved,each of Little Cure's drugs would produce $100 million in net income for Little Cure.The probability of the FDA approving a drug is 50%.
-Which of the following statements is FALSE?

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

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Definitions:

Memory Space

Refers to the amount of RAM allocated to running programs and processes on a computer.

Recursive Methods

Recursive Methods are methods that call themselves in order to break down a problem into simpler problems of the same type.

Cube

In geometry, a cube is a three-dimensional solid object bounded by six square faces, facets or sides, with three meeting at each vertex.

Sum of the Cubes

A mathematical operation that involves adding together the cubes (third power) of a series of numbers.