Shawn Determines That If Lexall Corporation Has High Revenues,then Waters

question 63

Multiple Choice

Shawn determines that if Lexall Corporation has high revenues,then Waters Corporation will have low revenues,and that if Lexall Corporation has low revenues,then Waters Corporation will have high revenues.Shawn buys stock in both corporations.

• A)He has reduced firm-specific risk but not market risk.
• B)He has reduced market risk,but not firm-specific risk.
• C)He had reduce both firm-specific risk and market risk.
• D)He has reduced neither firm-specific risk nor market risk.

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Definitions:

Units Of X

A hypothetical measure used in economic models and problems to quantify the amount of a good or service, referred to as Good X.

Utility Function

A mathematical representation that ranks the preferences of consumers or entities based on the consumption of goods and services.

Preferences

Refers to the ordering of different alternatives by individuals based on their values, satisfaction, or utility they provide.

Expensive Goods

Products or services that have a high price relative to their intrinsic value or compared to other alternatives in the market.