Question

In: Finance

Which of the following is true?

Which of the following is true?


a.

Accepting diversifiable risk in an efficient market results in an incremental benefit.


b.

The market portfolio is expected to possess a certain amount of diversifiable risk.


c.

Elimination is not possible for systematic risk; it can only be decreased by adding securities which have low correlation with the existing portfolio.

Solutions

Expert Solution

Answer : Option B

Explanation : Option B is true among the given statements because market portfolio consists of diversifiable risk which is also called as systematic risk. Systematic risk is one which can be eliminated by diversifying into the market. Therefore option B is correct because market portfolio consists of diversifiable risk.

Thanks....

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Which of the following is a true statement? Which of the following is a true statement?...
Which of the following is a true statement? Which of the following is a true statement? a. The electric potential energy depends on both the electric field and the amount of charge moving through that field. b. The electric potential depends on both the electric field and the amount of charge moving through that field. c. The electric potential energy and the electric potential depend on both the electric field and the amount of charge moving through that field. d....
Which of the following is true?
Which of the following is true? Book value is a better measurement than market value The separation of ownership and management is one distinctive feature of corporations. The primary goal of any company should be to maximize current period profits. Diversification decreases the variability of both specific and market risk.
Which of the following is true?
Which of the following is true?A. The first ionization energy of magnesium is lower than the first ionization energy of sodium.B. The second ionization energy of magnesium is expected to be lower than the second ionization energy of sodium.C. The first ionization energy of magnesium is higher than the first ionization energy of barium.D. The effective nuclear charge is greater for the valence electrons of Mg than for the valence electrons of chlorine.
Which of the following is true?
Which of the following is true?aSome items that are a source of transaction exposure are also a source of translation exposure.bSome items that are a source of transaction exposure arenot also a source of translation exposure.cSome items that are a source of transaction exposure are also a source of translation exposure, but some items that are a source of transaction exposure are not also a source of translation exposure.dnone of the options
Which of the following is true about fringe benefits? Which of the following is true about...
Which of the following is true about fringe benefits? Which of the following is true about fringe benefits? They represent additional compensation given for services performed They are only available for employees. The amount of the fringe benefit is never subject to income tax. They represent additional cash paid directly to employees.
Which of the following statements are true?
Which of the following statements are true? 1. Fats that contain more saturated fatty acid residues than unsaturated fatty acid residues are more likely to be solid at room temperature. 2. Triacylglycerols (triglycerides) contain ester bonds. 3. Saturated fats have lower melting points than do unsaturated fats. 4. Triacylglycerols (triglycerides) always contain three identical fatty acids. 5. Unsaturated fats are more likely than saturated fats to be liquid at room temperature.
Which of the following statements is true?
Which of the following statements is true?When a company goes bankrupt, common stockholders are the first to get paid.A preferred stock promises investors a fixed stream of dividend payments.Holders of preferred stocks have residual claim on the company’s assets and cash flows.Investing in a bond of a company is riskier than investing in a stock of the same company.
Which of the following statements is true?
Which of the following statements is true?The ask price a dealer quotes on a security is the price for which he is willing to sell the security.We can buy IBM shares from a stock broker.Any investor can buy securities from a private offering.A broker holds an inventory of securities
Which of the following statements is true?
Which of the following statements is true? a. Increasing the use of trade credit offered by a supplier is a use of cash. b. Cash is decreased when new debt is issued to purchase holiday merchandise. c. Collecting an accounts receivable is a use of cash. d. Accepting the credit offered by a supplier is a source of cash.
Which of the following is true for presentations?
QUESTION 28 Which of the following is true for presentations? Speech nervousness cannot be reduced by practice A presentation aligning with the audience interest is more likely to be effective Every presentation must include an outline Using less text or items is not a good practice for presentation QUESTION 29 The code of ethics in professional societies exist, because (Select multiple answers) The ethical rules might vary from across different societies and communities To differentiate ethics from law To prevent ambiguity about ethical understanding To provide guidance for resolving ethical dilemmas QUESTION...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT