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.

---

Definitions:

Hedge Clippers

Manual or powered gardening tools used for trimming and shaping hedges and bushes.

Manufacturer

A person or company that makes goods for sale, especially on a large scale or with industrial processes.

Alfred Adler

Austrian psychiatrist and founder of Individual Psychology, emphasizing the importance of the feeling of inferiority in the development of personality.

Inferiority Complex

A psychological condition that arises from feelings of inadequacy and insecurity, often leading to overcompensation or social withdrawal.