David Increases the Number of Companies in Which He Holds

question 18

Multiple Choice

David increases the number of companies in which he holds stocks.

• A)This reduces risk's standard deviation and firm-specific risk.
• B)This reduces risk's standard deviation and market risk.
• C)This raises market risk,but lowers firm-specific risk.What happens to overall risk is unclear.
• D)This raises firm-specific risk,but lowers market risk.What happens to overall risk is unclear.

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Definitions:

REM Sleep

A stage of sleep characterized by Rapid Eye Movements, during which most dreaming occurs and brain activity is akin to being awake.

Strenuous Physical

Strenuous physical activities involve intense or vigorous effort that requires considerable energy and endurance.

Short Naps

Brief periods of sleep, generally lasting less than 30 minutes, intended to quickly restore alertness and performance.

Insomnia

Recurring problems in falling or staying asleep.