Which of the following statements is FALSE?
A) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk.
B) When we combine many stocks in a large portfolio,the firm-specific risks for each stock will average out and be diversified.
C) Fluctuations of a stock's returns that are due to firm-specific news are common risks.
D) The volatility in a large portfolio will decline until only the systematic risk remains.
Correct Answer:
Verified
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