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:

Average Variable Costs

The total variable costs of production divided by the quantity of output produced, indicating the cost of producing each unit.

Average Total Costs

Represents the total expense per unit of output, comprising both fixed and variable costs, essential for assessing a company’s efficiency.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single participant can influence the price.