Explain the problem of the nondiversifiability of human capital.

Multiple choices are:

the unique skills and knowledge an employee must learn in a particular job with a particular firm may have less (or no) value in another job

a stockholders investment is easily diversified at very little cost, so stockholders care only about non-diversifiable risk

employees bear total risk (diversifiable plus non-diversifiable risk), whereas shareholders can easily choose to bear only non-diversifiable risk

employees may refuse to undertake a very positive-NPV investment because it has a large amount of diversifiable risk

A and B

A and C

A and D

B and C

B and D

C and D

all but A

all but B

all but C

all but D

all are true