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Which of the following statements is correct 1. Which of the following statements is correct? Possible sources of diversifiable risk include inflation and commodity price
Which of the following statements is correct
1. Which of the following statements is correct? Possible sources of diversifiable risk include inflation and commodity price changes, changes in currency exchange rates, and fluctuations in interest rates Systematic risk reflects the risk that remains after an investor has diversified his or her portfolio. A investor's exposure to company-specific risk can be diversified away by holding approximately 40 randomly-selected securities in an investor's portfolio 2. The phenomena and behaviors discussed above are based on the assumption that the majority of investors are risk averse. According to the concept of risk aversion, Risk-averse investors require a greater return for owning securities that exhibit greater risk. Investors prefer certainty to uncertainty, and therefore will accepta er return to avoid a potential.la era more uncertain e urn. 3. The financial performance of an investment is best expressed as a: O Dollar amount, since it clearly identifies the sum of money that can be spent by the owner of the investment. O Percentage, as it ignores the timing of the return, such as one year or ten years. O Dollar amount, since it reflects the timing of the investment's return. O Percentage, since it scales, or standardizes, the return earned from the investment by the investment's size. 4. How is it possible that an asset held in a portfolio can produce less total risk than the same asset held in isolation? O It is not possible for a portfolio to exhibit less total risk than the sum of the riskiness exhibited by each of the assets in the portfolio. O when an asset is held as part of a portfolio, it is possible that the pattern of variation in its returns may be set and averaged out. /anone asset in the portfolio. This would reduce the total variation or risk exhibited by the portfolio, even though the behavior of the asset's returns did not changeStep by Step Solution
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