Multiple Choice
Which of the following statements about market risk and firm-specific risk is true?
A) Market risk is an unsystematic risk, whereas firm-specific risk is systematic risk.
B) Investors are not rewarded for taking market risk, whereas they are rewarded for taking firm-specific risk.
C) Market risk is a diversifiable risk, whereas firm-specific risk is a nondiversifiable risk.
D) Market risk is the relevant risk, whereas firm-specific risk is an irrelevant risk.
E) Market risk includes a firm's default risk, whereas firm-specific risk includes economic risk.
Correct Answer:
Verified
Correct Answer:
Verified
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