Which of the Following Statements Is Correct

Multiple Choice

Which of the following statements is correct?

A) If a firm's shareholders are well diversified, we know from theory and from studies of market behavior that corporate risk is not important.
B) Undiversified shareholders, including the owners of small businesses, are more concerned about corporate risk than market risk.
C) Empirical studies of the determinants of required rates of return (k) have found that only market risk affects share prices.
D) Market risk is important but does not have a direct effect on share price because it only affects beta.