Ask Question
13 December, 02:51

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

+1
Answers (2)
  1. 13 December, 03:01
    0
    Fluctuations of stocks's returns that are due to firm-specific news are NOT common risks is the correct answer.
  2. 13 December, 03:09
    0
    Answer: Under the given option; the statement (d) is false. i. e. Fluctuations of a stock's returns that are due to firm-specific news are common risks.

    Fluctuations of a stock's return that are due to market wide news are common risk. These tend to fluctuate with fluctuation in market wide news and several other variables.

    Therefore, the statement Fluctuations of a stock's returns that are due to firm-specific news are common risks, is false.

    The correct option to this question is (d)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Which of the following statements is FALSE? The risk premium of a security is determined by its systematic risk and does not depend on its ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers