Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach
Section: Chapter Questions
Problem 5QE
Related questions
Question
Which of the following statements is most correct? (Ch. 8)
Group of answer choices
Diversification does not affect risk.
Diversification works better when investments are concentrated within one industry rather than across all industries.
As an investment strategy, diversification should generally be avoided.
Diversification eliminates market risk (also known as systematic or non-diversifiable risk).
Diversification eliminates firm-specific risk (also known as non-systematic or diversifiable risk).
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