Diversification Reduces

question 107

Multiple Choice

Diversification reduces

• A)only market risk.
• B)only firm-specific risk.
• C)neither market or firm-specific risk.
• D)both market and firm-specific risk.

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Definitions:

Fixed Costs

Fixed overheads, including rental costs, salary payments, and insurance fees, that stay unchanged with fluctuations in production or sales figures.

Required Units

The quantity of products or services that must be produced or sold to meet a specific target or fulfill a certain demand.

Variable Expenses

Costs that change in proportion to the activity or volume of operations in a business.

Net Income

The profit of a company after all expenses and taxes have been deducted from total revenue.