Which of the following statements is correct?
A) Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihood of unfavorable events.
B) Portfolio diversification reduces the variability of returns on an individual share.
C) When company specific risk has been diversified, the inherent risk that remains is market risk which is constant for all securities in the market.
D) A share with a beta of -1.0 has zero systematic (or market) risk.
E) The SML relates required returns to firms' systematic (or market) risk.The slope and intercept of this line cannot be controlled by the financial manager.
Correct Answer:
Verified
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Q14: The standard deviation is the weighted average
Q15: Market risk refers to the tendency of
Q16: Assume Share A has a standard deviation
Q18: A listing of all possible outcomes, or
Q19: Combining shares with perfectly correlated shares returns
Q21: Which of the following is not a
Q22: Which of the following statements is most
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