Which of the following statements is true? a. The required return on a firm's common stock is, in theory, determined solely by its market risk. If the market risk is known, and if that risk is expected to remain constant, then no other information is required to specify the firm's required return. b. Portfolio diversification reduces the variability of returns (as measured by the standard deviation) of each individual stock held in a portfolio. c. If an investor buys enough stocks, he or she can, through diversification, eliminate all of the diversifiable risk inherent in owning stocks. Therefore, if a portfolio contained all publicly traded stocks, it would be essentially riskless. d. A security's beta measures its non-diversifiable, or market, risk relative to that of an average stock. e. A stock's beta is less relevant as a measure of risk to an investor with a well-diversified portfolio than to an investor who holds only that one stock.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Which of the following statements is true? a. The required return on a firm's common stock is, in theory, determined solely by its market ...” 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
You Might be Interested in
Bryan needs a new backpack he compares prices from three different backpacks at a local store to find the best deal which function of money is Bryan demonstrating
Answers (1)
g Market conditions and factors that tend not to favor first movers include A. growth in demand that depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed
Answers (1)
Suppose that Jack and Hal and Sophia enter in to a contract for the sale of the business. Jack however was drunk at the time that the negotiations took place and at the time of the signing of the contract.
Answers (1)
The sole proprietor of the Milwaukee Machine Company receives all accounting profits earned by her firm. She has a standing salary offer of $35,000 a year to work for a large corporation.
Answers (1)
A credit to a liability accounta. indicates an increase in the amount owed to creditors. b. indicates a decrease in the amount owed to creditors. c. is an error. d. must be accompanied by a debit to an asset account.
Answers (2)
New Questions in Business
The accounts receivable credit column of the cash receipts journal is A. posted by individual amounts only at the end of the month. B. not posted. C. posted in summary only at the end of the month. D.
Answers (1)
Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods. a.
Answers (1)
Thirty-two new employees from Market Enterprises are attending orientation, receiving information about company policies, and filling out various forms. These employees comprise a group. 1. True2. False
Answers (1)
Which of the following statements is true? a. The required return on a firm's common stock is, in theory, determined solely by its market risk.
Answers (1)
Jack is preparing for a party and makes potato salad, but he does not realize that the salad contains one escherichia coli bacterium. he accidentally leaves the salad out of the refrigerator for 2 hours. if e.
Answers (1)