Missy Recently Rearranged Her Portfolio So That It Has a Higher

question 47

Multiple Choice

Missy recently rearranged her portfolio so that it has a higher average return.As a result of this rearranging,Missy

• A)raised both firm-specific risk and market risk.
• B)raised firm-specific risk,but not market risk.
• C)raised market risk,but not firm-specific risk.
• D)None of the above is correct.

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Definitions:

Gross Profit to Sales

A financial ratio that determines the percentage of gross profit relative to sales revenue, indicating the efficiency of production and pricing.

Theoretical Assumptions

Foundational ideas or principles assumed to be true without immediate empirical testing, used as the basis for further theory development or analysis.

Conservatism

An accounting principle that advises to exercise caution and report expenses and liabilities as soon as possible, but to delay the recognition of revenues and assets.

Gross Profit Method

An inventory estimation technique that determines the cost of goods sold and ending inventory using the gross profit margin.