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  3. Study Set
    Principles of Finance
  4. Exam
    Exam 12: The Cost of Capital
  5. Question
    When a Firm's Stockholders Are Not Well Diversified,the Firm's True
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When a Firm's Stockholders Are Not Well Diversified,the Firm's True

Question 3

Question 3

Multiple Choice

When a firm's stockholders are not well diversified,the firm's true investment risk will not be measured by beta and the CAPM procedure will ____ the correct value of rs.


A) overstate
B) accurately predict
C) understate
D) none of the above.

Correct Answer:

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