Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Which of the following statements most correctly describes why investors are not cannot force compensation (extra returns) for unsystematic risk? Failing to diversify to
Which of the following statements most correctly describes why investors are not cannot force compensation (extra returns) for unsystematic risk? Failing to diversify to remove unsystematic risk is poor financial planning and those investors don't deserve extra compensation. Actually, investors can force compensation for unsystematic risk, it is systematic risk that does not receive extra returns. Individual unsystematic risk events cannot be anticipated or projected so investors don't know that they will need to be compensated with more risk. When investors ask the high unsystematic risk companies for more returns the companies try but typically are not successful.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started