The Unsystematic Risk Is

question 6

Multiple Choice

The unsystematic risk is:

• A)the portion of return variance that cannot be explained by market movements.
• B)the portion of the security?s return variance that is explained by market movements.
• C)the total variance of a security's returns.
• D)the total risk that cannot be diversified away.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a company that remains after deducting its liabilities, representing ownership interest.

Total Liabilities

The sum of all financial obligations (debts) owed by a company to external entities or individuals.

Bond Interest

The regular payments made to bondholders as compensation for the investment, typically expressed as a percentage of the principal.

Dividends

Disbursements issued to shareholders by a company, typically sourced from the firm's earnings.