Which of the Following Statements Is CORRECT

question 93

Multiple Choice

Which of the following statements is CORRECT?

• A) Portfolio diversification reduces the variability of returns on an individual stock.
• B) Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihood of unfavorable events.
• C) The SML relates a stock's required return to its market risk.The slope and intercept of this line cannot be controlled by the firms' managers, but managers can influence their firms' positions on the line by such actions as changing the firm's capital structure or the type of assets it employs.
• D) A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.
• E) When diversifiable risk has been diversified away, the inherent risk that remains is market risk, which is constant for all stocks in the market.

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Definitions:

Universal Health-Care

A health care system that provides medical services to all citizens, usually funded through government programs.

Social Welfare Network

A system of governmental and non-governmental organizations working together to provide assistance and support to those in need, aiming to ensure the well-being of society.

Social Gospel Movement

A religious movement that emerged in the 19th century, emphasizing the application of Christian ethics to social problems such as poverty and inequality.

Class Equality

Class equality refers to a societal state in which all social classes have equal rights, opportunities, and access to resources, minimizing or eliminating disparities in wealth and power.