An individual stocks diversifiable risk

Assignment Help Financial Management

Reference no: EM131311004

Which statement is TRUE?

A. Managers should under no conditions take actions that increase their firm's risk relative to the market, regardless of how much those actions would increase the firm's expected rate of return

B. An individual stock's diversifiable risk, which is by its beta, can be lowered by adding more stocks to the portfolio in which the stock is held

C. If investors become less averse to risk, the slope of the Security Market Line (SML) will increase

D. According to the Capital Asset Pricing Model, investors are primarily concerned with portfolio risk, not the risks of individual stocks held in isolation. Thus, the relevant risk of a stock is the stock's contribution to the riskiness of a well-diversified portfolio.

Reference no: EM131311004

Questions Cloud

Jane roach worked for a beer distributor : Jane Roach worked for a beer distributor. Jane Roach was smoking during her cigarette break at work. It began to rain, and Roach went under the tree on the employer's property. Out of nowhere, one of the Employer's beer trucks slammed into the tre..

What is the ratio of the electron''s speed to proton''s speed : An electron (mass m1 = 9.11 x 10-31 kg) and a proton (mass m2 = 1.67 x10-27 kg) attract each other via an electrical force. Suppose that an electron and a proton are released from rest with an initial separation d = 3.50 x 10-6 m.

Problem associated with the capital asset pricing model : Which of the following is NOT a problem associated with the Capital Asset Pricing Model? Company X has a higher required return than Company Y, but Company X has a lower standard deviation of returns than Company Y. Given this information, wh..

Describe major appropriations and changes from previous year : Describe major appropriations and changes from the previous year. Describe major revenue sources and changes from the previous year. Describe fixed assets and positions and changes from the previous year.

An individual stocks diversifiable risk : Managers should under no conditions take actions that increase their firm's risk relative to the market, regardless of how much those actions would increase the firm's expected rate of return. An individual stock's diversifiable risk, which is by its..

Discuss the role of oral estradiol therapy : Discuss the role of oral estradiol therapy in the progression of subclinical atherosclerosis when initiated in early menopause compared when initiated in late menopause

Discuss two internal sources and two external sources : The marketing control process is important as it provides the opportunity for an organization to adapt to both external and internal environmental change. Discuss two internal sources and two external sources that will create strategic change with..

Identify military unit that is utilized to combat terrorism : Identify one military unit that is utilized to combat terrorism. Discuss their rules of engagement, mission, training, and resources. Provide an example of where they have been utilized specifically in the fight against terrorism.

Why value-adding support strategies are important : After reading this chapter, please comment on why value-adding support strategies are important in the implementation of strategy

User Account

All Pages